Household energy consumption in Russia could grow 2.5 times due to miners. Mining should be recognized as an entrepreneurial activity, according to the Ministry of Energy.

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Photo: IZVESTIA/Zurab Javakhadze</p>

09.12.2021
Because of miners, household consumptionelectricity in Russia this year in a number of regions may increase by 2.5 times, energy market participants told Izvestia. Shadow cryptocurrency miners do not register their businesses and install energy-intensive equipment in residential buildings.</p>

According to the head of the energy business En+Mikhail Khardikov, the increase in electricity consumption by miners under the guise of “population” in 2021 in the country as a whole could be more than 20%. At the same time, the increase in household energy consumption in the country exceeds all reasonable limits and in some regions can reach 250%, noted Igor Runets, CEO of Bitriver (the largest operator of data centers for mining in Russia).

By shadow manners we mean peoplewho, without registering their business, install energy-intensive equipment for cryptocurrency mining in residential premises and garages. Today they consume 500-700 MW and could number 50-100 thousand people, an industry source said. As a result, due to the rapid growth of shadow cryptocurrency mining, which creates an excessive load on the country’s energy system and is not regulated by law, Russians may face massive power outages in the coming years, Khardikov added.

Runets emphasized that regions suffering fromhome miners are already subject to frequent blackouts due to grid overload. This problem is especially acute in the winter season, when there is an increase in energy consumption by individuals, he added.

The Ministry of Energy said that for minersRegions with the lowest electricity tariffs are attractive. “Traditionally, the Irkutsk region is considered the center of home mining, in which Irkutsk and Shelekhovsky districts can be distinguished. In addition to it, home mining may become widespread in the Krasnoyarsk Territory and in certain regions of the European part of Russia (for example, in some republics of the North Caucasian Federal District),” Runets clarified.

In October 2021, there were alreadycases of shutting down entire streets, which had not happened before even at 30 degrees below zero, he added. Earlier, local authorities announced an “avalanche-like” increase in electricity consumption in the region for household needs by 159% due to shadow miners. Such loads can lead not only to accidents and blackouts, but also to fires, Runets concluded.

“The following situation occurs:in a village of 200 houses there is a 2 MW transformer, that is, for each house there is 10 kWh. And one of the residents decided to start mining and purchased 500 kWh of mining equipment,” said Alexander Brazhnikov, executive director of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (RACIB), noting that machines for mining cryptocurrency work around the clock, without interruption , and there may come a time when there is not enough electricity for other home owners.

Come out of the shadows
Mining should be recognized as entrepreneurialactivity, according to the Ministry of Energy. As representatives of the ministry previously stated, regulation of the sphere should imply that at the stage of joining the energy system it is necessary to declare the nature of the consumed load - for business or personal consumption. Also, Energy Minister Nikolai Shulginov noted that miners should not receive electricity at prices for the population.

The problem of shadow mining is realis growing, agree the Energy Consumers Community. Shadow miners not only cause overloads in residential power grids, they actually embezzle money that provides preferential household tariffs, business representatives emphasized.

The NP Market Council emphasized that tariffs forpopulation are set at a level significantly lower than for other consumers. Considering that mining is an activity aimed at making a profit, the use of subsidized tariffs for the population in such cases is unjustified, the organization believes.

The situation requires an early resolution, sinceentails an increase in cross-subsidization, which means a burden on official business and an increase in the volume of electricity sales at reduced prices by generators to the population on the wholesale market, the Council of Energy Producers said.

In the Association of Guaranteed Suppliers andenergy sales companies consider it expedient to introduce differentiated tariffs for the population, increasing fees for higher consumption. Then cryptocurrency miners will pay a fair price for electricity, they noted.

If Russia manages to bring shadow mining tolegal field, then this industry will have very great potential, says expert in the field of financial communications Andrei Loboda. An especially big competitive advantage for Russia could be environmentally friendly mining using green energy, the expert concluded.
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