Authorities Seize Over 1,500 Crypto Mining Rigs in Dagestan Crackdown

Law enforcement and other authorities in Dagestan have closed down two illegal crypto farms, confiscating more than 1,500 mining machines. Government agencies in the republic, considered one of Russia’s capitals of underground coin minting, carry out regular raids against such facilities.

Cryptocurrency Miners in Dagestan Accused of ‘Illegal Entrepreneurship’

Officers from the Ministry of Internal Affairs of Dagestan and the Federal Security Service have uncovered a large crypto mining farm in the Russian republic’s capital city, Makhachkala, Tass news agency reported, quoting the ministry. The law enforcement agents have seized 1,476 devices producing digital currencies, a press release detailed.

The department added that the owners of the illegal facility have been also providing services to other miners including installing mining rigs, connecting them to the power grid and providing security. Experts are now working to establish the market value of the confiscated mining equipment as well as the amount of consumed electricity.

The law enforcement officials who raided the crypto farm further noted they are collecting evidence to charge the operators under Part 2 of Art. 171 of the Criminal Code of the Russian Federation, “Illegal entrepreneurship,” and part 2 of Art. 165, “Causing property damage by deception or abuse of trust.”

In the past few years, Dagestan has become a hotspot for illegal and home crypto mining, along with Russian regions such as Krasnoyarsk Krai and Irkutsk Oblast that have maintained low electricity rates. As a result, they have suffered blackouts due to breakdowns, especially in residential areas where the electrical networks are not designed to handle the excessive loads.

In another case, the local power grid operator and distributor, Rosseti Severniy Kavkaz, recently found 95 rigs minting cryptocurrency at a facility of the republic’s water supply utility, Мahachkala Vodokanal. The hardware was installed in a metal container at the Vuzovskoe Ozero pumping station.

The crypto farm had a power capacity of 260 kW and its illegal electricity consumption exceeded 4.5 million kWh, worth more than 26 million rubles (over $400,000). According to an announcement by Rosseti, the farm was set up by a resident of the Dagestan capital who worked in collusion with employees of the water utility.

Authorities in Moscow have been taking steps to regulate crypto mining as a business activity for which Russia has certain advantages like its cheap energy sources and favorable climatic conditions. Lawmakers at the State Duma are currently reviewing a new bill tailored to achieve that. Meanwhile, in an effort to curb mining with household electricity, the Russian anti-monopoly agency has suggested introducing higher electricity rates for those mining at their homes.

Do you expect authorities in Russia’s Dagestan to continue to crack down on cryptocurrency miners? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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