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In the Russian south of the Dagestan Republic, a new wave of mining has already started, and some are even organizing mining in legally prohibited areas. Mayors and governors have claimed major power losses concerning these unlawful operations by these miners, resulting in increasing demands for new regulations.
Dagestan Prime Minister Abdulmuslim Abdulmuslimov stressed the need to address these unlawful activities after a substation fire in Makhachkala that was connected to increased power consumption due to mining.
This response from Dagestan’s government involves a tighter inspection of these subterranean establishments. Later, authorities released images of an underground crypto mining site in a temporary shelter with cooling fans aimed at controlling heat from processing, which runs 24/7.
These setups are also problematic because they endanger the electrical infrastructure and serve as a safety detail as they are unauthorized and affected in hidden manners.
The problem observed in Dagestan raises a similar question across Russia about the highly energy-consuming nature of digital currency mining. Instead, the Russian government, led by President Vladimir Putin, has implemented legal measures for cryptocurrency mining.
Currently, effective from November 1, 2024, this new law prescribes the creation of a particular register by the finance ministry for entities engaged in crypto mining. In addition, those participating in this kind of activity will need to provide some information to the financial monitoring regulator of Russia, which will increase the sector’s transparency.
This legislative move is in line with other efforts aimed at tackling unlawful mineral extraction exercises that do not observe legal procedures in electricity consumption and do not pay taxes.
Through the regulation of the industry, the government seeks to reduce the negative effects on the nation's power supplies and ensure that crypto mining adds value to the nation's structure without harming the people or wasting their resources.
The measures taken to reduce the overload in Russia’s cryptocurrency mining industry are hearing the first signals required to establish a legal and reasonable approach to mining’s social impact and energy stability. When the law is implemented, the miners will have to register and disclose operations details, which is one requirement of the law.
Thus, compliance with the requirements will eliminate the problem of frequent blackouts and ensure that Russian activities in digital currencies do not violate domestic and international norms for the mining industry’s operation as sustainable and non-harmful to the environment.
