Electricity shortages thwart Russia’s AI ambitions, despite crypto mining bans

Electricity shortages have caused problems for many economies, limiting Russia’s AI ambitions, although the country has cut on the energy-consuming crypto mining in some areas.

Crypto mining activities and AI data centers are reportedly consuming huge amounts of energy as well as water to cool servers.

This also comes as many countries fail to sustain their power needs, especially in the 2020s, causing problems politically, socially, and economically. This has reduced their zeal for economic growth and international trade expansion.

AI pushes the creative industry in Russia although power situation is dire

As part of initiatives to further the AI push, Russia has been hosting events related to BRICS claiming that it is in the right direction in fields like entertainment. On November 13 and 14, Moscow’s Mayor Sergey Sobyanin at a Cultural Media Digital Forum testified that the city’s creative industries have grown 35% over the past two years, thanks to AI.

However, the energy problem is leaving Russia’s AI ambitions paralyzed before they hatch. According to Russia’s grid operator, AI electricity use consumed approximately 2.5 GW in 2024 and is on course to reach 10 GW in the coming years.

With such projections, the country seems to be failing to grow its energy infrastructure to meet the expected demand as Russia has been increasing national grid growth of 2-3 GW per year. With the Ukraine war underway, it is also difficult to see how Russia will develop its energy infrastructure faster than its current speed.

To show the crippling power situation, Russia announced on November 19, a cryptocurrency mining ban in the Ukrainian territories it over-sees and other energy-stressed regions.

Cryptocurrency mining, the process that blockchain networks, like Bitcoin and other cryptocurrencies, use to finalize transactions, requires immense amounts of energy to be carried out.

What remains to be seen is whether the ban on cryptocurrency mining in energy-stressed regions will help improve the energy supply situation in the same areas and cascade to the AI industry.

Russia is not alone in experiencing power deficits

In Africa, South Africa rolling blackouts were witnessed in 2023, but they seem to have died down in 2024 after state-owned power provider Eskom approached the National Energy Regulator of South Africa (NERSA) to consider a 36.15% tariff increase for 2025 plus more tariff hikes for 2027 and 2028.

Elsewhere, the governing Islamic Mullahs have enforced rolling blackouts in Iran due to fuel shortages. Winters in some parts of the country can be extremely cold, and the new development on the energy front will hurt the citizens of Iran.

Despite having sailed through two winters in their war with Ukraine, the coming winter in Russia does not look like it will be like the other two. Despite fighting to provide power during winter, Russia’s power shortages are expected to maintain long-term negative effects, especially in AI, including its reliance on the Internet to allow access to AI.

The “BRICS” group (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the UAE) saw Russia assume its chairmanship. The group’s mission is to challenge Western dominance of technologies and infrastructures. The group has embarked on a program searching for an “anticolonial AI and digital cooperation agenda” with the guidance of Russia.

This would include, if successful, the procedures and directions to bypass the United States and Western nations generally, including, possibly, even setting up its Internet. However, in Russia, the results have not been encouraging.

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