- Dagestan calls for stricter measures against crypto miners causing outages, as they build underground facilities to evade laws.
- New Russian crypto mining laws effective November 1, 2024, require a special register and miner disclosures to regulators.
OUR TAKE
Dagestan’s crackdown on illicit crypto mining highlights the urgent need for regulatory frameworks to manage energy-intensive activities. Stricter controls can mitigate infrastructural strain and environmental damage, ensuring sustainable technology use. This approach may set a precedent for other regions grappling with similar issues.
–Vicky Wu, BTW reporter
What happened
The Russian republic of Dagestan is calling for stricter regulations against cryptocurrency miners who are blamed for causing power outages and attempting to circumvent laws by setting up clandestine mining operations underground.
The issue has gained urgency following a substation fire in the capital city, attributed to a surge in electricity demand driven by crypto mining activities. Abdulmuslim Abdulmuslimov, the local prime minister, highlighted the need for enhanced oversight of these operations. “The owners of illegal cryptocurrency mining installations are coming up with new methods of ‘circumventing’ the law – they install mining farms underground,” Abdulmuslimov said.
In one instance, authorities discovered a hidden crypto farm located in an improvised underground cavern equipped with numerous fans to cool the high-powered computers. These mining activities consume vast amounts of electricity due to the constant operation of specialised hardware required to solve complex computational puzzles.
Also read: Dagestan urges crackdown on illegal crypto-mining amid power outages
Also read: OpenAI’s official account targeted in crypto scam incident
Why it’s important
The situation in Dagestan underscores the growing global concern over the environmental impact and legal implications of cryptocurrency mining.
With the impending legislation set to take effect from November 1, 2024, under specific conditions, Russia is moving towards formalising the industry by requiring companies engaged in crypto mining to register with the finance ministry. Individual miners will also be obligated to disclose relevant information to financial watchdogs. This regulatory push aims to address the strain on power grids and ensure transparency, reflecting the broader international trend of tightening controls over the energy-intensive activity of cryptocurrency mining.
As countries worldwide grapple with the dual challenges of sustainable energy use and financial regulation, Dagestan’s efforts may serve as a model for managing the disruptive effects of crypto mining on local infrastructure and communities.
