Russia is losing 20 billion rubles a year to illegal mining

Illegal cryptocurrency mining is causing billions of rubles‘ worth of damage to the Russian state and economy, according to an estimate made public in the country’s parliament.

Despite severe restrictions on the energy-intensive industry in some areas, the Siberian oblast of Irkutsk remains the region with the highest concentration of underground crypto farms.

Financial damages resulting from unauthorized coin minting activities amount to almost 20 billion rubles (over $250 million) annually, according to Nikolay Shulginov, Chairman of the Energy Committee at the State Duma, the lower house of the Russian parliament.

Illegal crypto mining causes electricity shortages, excessive grid loads, hurts distribution, and affects other consumers, including social facilities and new housing projects, the deputy told Russian media. Speaking to the RIA Novosti news agency, he elaborated:

“Illegal mining has negative economic effects on a national scale … The annual damage to the Russian economy due to losses in the energy sector amounts to more than 10 billion rubles, and lost taxes are up to 9.6 billion rubles.”

The figures Shulginov was quoting have been provided by the Stolypin Institute for the Economy of Growth, a research organization devoted to developing strategies for economic modernization.

Russia legalized the mining of Bitcoin and other cryptocurrencies in late 2024, allowing both companies and individual entrepreneurs to engage in it, provided they register with the Federal Tax Service (FNS) and pay due taxes.

Private citizens were also permitted to mine, even without registration, if their monthly electricity consumption did not exceed 6,000 kWh.

However, less than a third of those engaged in mining have so far reported to the state, prompting proposals for an amnesty and other measures to bring more of the sector out of the shadow economy.

Growing power deficits in areas attracting mining enterprises with low, often subsidized electricity rates have forced local and federal authorities to temporarily or permanently prohibit the activity.

Mining has been completely banned until the spring of 2031 in at least 10 Russian regions, from the republics in the North Caucasus and the occupied oblasts of Eastern Ukraine, to the Far East. Another two are preparing to impose year-round restrictions in 2026.

Dubbed the mining capital of Russia, Irkutsk Oblast initially banned mining in its southern parts only during the fall and winter seasons, but eventually officials expanded the measure to cover all months of the year.

Nikolay Shulginov revealed that the Siberian region accounts for the largest number of illegal crypto farms discovered in 2025, despite the ongoing crackdown. Members of his committee who visited it were shown warehouses full of thousands of units of confiscated mining hardware.

The North Caucasian Federal District is also competing to top the negative chart. More than 100 illegal mining facilities were busted there last year, as previously reported by Cryptopolitan, with Dagestan accounting for 80% of them.

In October, the head of the national grid operator Rosseti, Andrey Ryumin, highlighted the concentration of illegal miners there. The company estimated they burned 622 million rubles worth of electricity between January and September 2025, with nearly 100 investigated cases of theft.

At the same time, Shulginov admitted that the restrictions have largely failed to bring the expected results. He told RIA:

“The mining ban introduced in several regions of the country at the beginning of 2025 has not produced any significant effects – it has freed up only about 400 MW of capacity.”

A draft law imposing heavy administrative penalties for illegal mining was filed in the Duma this week. Under the new legislation, fines will reach 2 million rubles (over $25,000), but repeated offenses will lead to 10 million-ruble fines (almost $130,000).

Introducing criminal liability should be the next step in this fight, Shulginov added. Besides financial punishment, the Russian justice ministry suggested at the end of December hitting miners minting without registration with prison sentences and even “forced labor.”

Meanwhile, the Duma adopted on first reading on Tuesday a bill tasking the Ministry of Finance with oversight of the crypto market, including the mining sector.

Its sponsors are pitching the document as another measure to legalize more of the industry as it seeks to eliminate administrative barriers and increase registration rates among involved businesses.