City of Irkutsk proposes permanent prohibition on cryptocurrency mining operations
In the vast expanse of southern Siberia, the region of Irkutsk has emerged as a hotspot for Bitcoin mining in Russia. This surge in mining activities can be attributed to the abundance of hydroelectric power from Lake Baikal, making Irkutsk an ideal location for this digital gold rush.
However, this boom in Bitcoin mining has not come without its challenges. Over the past five years, electricity consumption in Irkutsk has increased by 28 percent, primarily due to miners. This significant rise has raised concerns about the electricity consumption of miners, a topic that President Putin has previously expressed interest in.
In 2023, Russia reportedly earned 54,000 bitcoins, which is one-sixth of all coins, through mining activities in regions like Irkutsk. This success has established Russia as a new center for Bitcoin mining. Yet, uncontrolled mining often pushes power supplies to their limits, and the total electricity consumption by mining in Russia is estimated to be 16 billion kilowatt-hours, or 1.5 percent of the total electricity consumption.
The governor of Irkutsk, Igor Kobzev, is calling for the mining ban to be extended for a full year, starting on April 1, to address the power shortage. This call follows a winter mining ban that was introduced for some regions at the beginning of the year but seems insufficient to address the power deficit in Irkutsk. If the power deficit is not addressed, it is expected to reach 2.9 gigawatts by 2030 in Irkutsk.
Power suppliers like the Rosseti group recognize that Bitcoin mining can be a useful tool for utilizing excess capacity. However, the unregulated growth of mining activities has led to power outages in regions like Dagestan, where the regional government took action against illegal miners after power outages. It's important to note that these outages were not caused by Bitcoin miners or a lack of electricity, but by an outdated power grid.
The government of Dagestan is seeking a scapegoat for the outdated power grid, but the issue is not unique to this region. Many other regions in Russia, such as Buryatia and Transbaikalia, have also imposed restrictions on miners during the winter months. Furthermore, regions like Yakutia (Sakha Republic) and parts of Siberia have implemented restrictions on Bitcoin mining during winter, with some exceptions for sparsely populated areas where energy surplus allows continued mining operations.
Mining in Russia is seen as both an opportunity and a challenge for power suppliers. On one hand, it provides a means to utilize excess capacity. On the other hand, it strains power supplies and requires careful management to prevent outages. As Russia continues to navigate this digital gold rush, striking a balance between harnessing the opportunities and managing the challenges will be key.
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