Irkutsk Under Scrutiny: Authorities Uncover Over 8,000 Illegal Crypto Miners

The Siberian city of Irkutsk, known as Russia’s unofficial capital of cryptocurrency mining, has found itself at the center of a large-scale crackdown on illegal mining operations. Russian authorities have identified more than 8,000 unlawful crypto farms, and the actual number may be even higher, according to the regional power company Irkutskenergosbyt. Data shows that over 1,500 illegal mining sites are located in Irkutsk itself, with another 1,700 in the surrounding Irkutsk region. The cities of Angarsk and Shelekhov are also classified as being in the red zone.

The Rise of “Gray” and “Black” Miners A growing demand for so-called noise boxes – special enclosures designed to reduce the loud hum of mining machines – makes it clear that a significant portion of these activities takes place in residential homes, garages, and basements. Miners use them to avoid neighbor complaints and official attention.

These boxes, often built from plywood and mineral wool, offer only limited noise reduction and significantly increase fire hazards. “Gray” miners are households that consume less than 6,000 kWh per month, meaning they are not required to register with the Federal Tax Service (FNS). Many mine unofficially, placing additional strain on local power grids.

“Black” miners, on the other hand, steal electricity by illegally tapping into the distribution network. The power grid operator Rosseti tracks these operations using both electricity consumption patterns and internet traffic analysis.

From Initial Enthusiasm to Tight Restrictions When Russia officially recognized cryptocurrency mining as a legal business in 2024, the government expected cheap and abundant energy to bring significant revenue to the state budget. However, the mass concentration of mining facilities has caused power shortages in several regions.

As a result, a wave of bans followed – in roughly a dozen regions across the country, mining is now prohibited until 2031. In the southern parts of the Irkutsk region – nicknamed Russia’s “mining metropolis” – an initial winter-only ban has been expanded into a year-round restriction.

Stricter Laws and New Threats for Miners Russian lawmakers are preparing legislation that would ban mining in data centers to free up computing power for other purposes, including artificial intelligence development. Data center operators must now report any mining activities to the FNS and other authorities. The proposals also include tougher penalties for violating mining bans – including allowing authorities to remotely disconnect crypto farms from the grid during peak electricity demand periods. Irkutsk has thus become a symbolic battleground between the state and illegal cryptocurrency mining, as officials work to strike a balance between supporting a profitable industry and protecting the country’s energy stability.

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