Currently, Russian law enforcement is investigating the case and examining one of the deputy directors for possible abuse of power.
Russia’s oldest prison, Butyrka, has turned out to be a crypto mining farm. Russian law enforcement officials found coin mining hardware in the prison on the premises of a psychiatric clinic operated by the Federal Penitentiary Service. Now, the investigation is going on.
For now, it has been identified that the high-ranking representative of Russia’s Butyrka management installed the crypto mining farm equipment in November 2021. The rigs were extracting cryptocurrency until February of this year. During that period, almost 8,400 kW of electricity paid by the government was consumed. The total cost of this consumption makes up more than 62,000 rubles (about $1,000). As a result, the deputy warden is accused of “actions that clearly go beyond his powers, thereby significantly violating the legally protected interests of the society or the state.”
Currently, Russian law enforcement is investigating the case and examining one of the deputy directors for possible abuse of power.
Illegal Crypto Activities in Russia
Crypto mining looks a lucrative source of additional income. In 2021, Russia became the world’s third biggest crypto-miner, with the largest crypto-mines located in the country’s north and in Siberia, where the temperatures are low and there is access to cheap power. However, cheap electricity is an opportunity for unauthorized activities. Therefore, areas like Krasnoyarsk Krai and Irkutsk Oblast that have low electricity costs have become hotspots of illegal crypto activity. In particular, there were cases of breakdowns and blackouts, especially in residential areas where electrical grids are not capable of handling excessive loads.
As a result of unauthorized crypto activities that pose a threat to the financial stability of the country, Russia’s central bank proposed banning the use and mining of cryptocurrencies on Russian territory in January. According to the Bank of Russia, mining undermines the country’s green agenda, jeopardizes Russia’s energy supply and amplifies the negative effects of the spread of cryptocurrencies, creating incentives for circumventing attempts at regulation.
The Bank of Russia said:
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia. This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy. The best solution is to introduce a ban on cryptocurrency mining in Russia.”
While banning the mining activities, Russia is planning to roll out the pilot transactions of the country’s digital ruble, which could serve as a global payment method for the country. The Russian Central Bank finalized the first CBDC trials with Customer-to-Customer (C2C) payments as early as January 2022 and already started testing its digital ruble in preparation for real-world international transactions.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.
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