Russia to move crypto miners to the barren north, let them mint at old oil fields

Authorities in Russia may offer crypto miners to move north in an effort to reduce electricity consumption in other parts of the country. The goal is to utilize excess power and currently idle infrastructure where available.

The idea is being pitched against the backdrop of a ban on coin mining in a number of energy-deficient regions that has been expanded both geographically and in terms of time frame over the course of the past few months.

Russian energy ministry says miners can mine Bitcoin in the desolate north

Cryptocurrency miners may be asked to relocate to Russia’s northern regions, where they will potentially pay lower electricity rates, Russian Deputy Minister of Energy Evgeny Grabchak revealed in an interview with the Tass news agency.

Russia has some unused power generation capacities and transmission infrastructure in the north that it can either dismantle and transfer elsewhere, which is not always possible, or leave behind and continue to spend money on its maintenance, the official explained.

Grabchak believes this is something the government can discuss with mining companies. Those who opt to move to these areas may also be offered to pay at “grid rates” for the energy they burn, he said, speaking at the sidelines of the “Russia – Islamic World” forum in Tatarstan’s capital, Kazan.

The deputy minister noted this is not necessarily a discount for crypto miners but rather a different mechanism to determine electricity prices. Nevertheless, grid rates usually cover only transfer and distribution costs and not the value of the electricity itself.

Evgeny Grabchak first hinted that miners could move their equipment to more energy-rich parts of the country earlier in May after Russian authorities introduced a ban on mining activities in a number of regions. He was specifically referring to the entire north, part of the northwest, and some areas in the Volga region.

In a podcast on the future of the recently legalized crypto mining industry, the energy ministry representative unveiled that the federal government plans to expand the prohibition, which in many cases started as a geographically limited temporary measure, to cover more Russian regions experiencing energy shortages.

Crypto miners can utilize power infrastructure at abandoned oil fields

The executive power in Moscow has completely banned the minting of digital coins in about a dozen territories. The ban, which will be in force until March 15, 2031, already covers the Russian republics of Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, and Chechnya as well as the occupied parts of the Ukrainian oblasts Donetsk, Lugansk, Zaporizhzhia, and Kherson.

In response to requests from local authorities, the Russian government prohibited mining operations in the south of the Irkutsk region, dubbed “the mining capital of Russia,” in April. According to Grabchak, the mining ban in Irkutsk has slowed down the growth in energy consumption. He elaborated:

“We probably can’t draw any definite conclusions about the reduction in consumption. The energy system operator did some calculations and said this allowed us to reduce consumption in Irkutsk by 200-300 MW. It seems to me that we have slowed down the growth even more.”

Also, last month, Evgeny Grabchak indicated that temporary restrictions in Buryatia and Transbaikal, which share energy-generating capacities with Irkutsk, may also become permanent. Northern Karelia, the Penza Region, and part of Khakassia may be added to the list as well, his department announced at the end of April.

Grabchak now revealed that the Russian Ministry of Energy is discussing with mining enterprises the option to attach their data centers to power grid substations built in the past to provide electricity to production facilities at oil wells.

Many such oil fields have been depleted already, but the electric substations have been preserved, and crypto miners could use them if that benefits the Russian economy and the energy system of the respective regions, the government official suggested.

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