Russia considers new energy tariffs as a transfer of crypto mining to China

Russia’s energy ministry is seeking to introduce special electricity tariffs for cryptocurrency mining after the industry relocates from nearby China to the country.

Russia’s Energy Minister Nikolai Shulginov announced Wednesday that authorities are working on a new framework to differentiate tariffs between general use and cryptocurrency mining, local news agency RBC reported October 13.

Schulginov said electricity should not be used in residential tariffs on Russian cryptocurrency mines, noting:

“We cannot allow miners to capitalize on the situation at the expense of low residential electricity tariffs […] In order to maintain the reliability and quality of electricity supply, we believe that miners need to be banned from using electricity in residential tariffs.

Amid a nationwide crackdown on cryptocurrencies, Chinese miners have fled the country, prompting allegations that some Russian territories have experienced explosive increases in energy use.

Russia’s Irkutsk region, about 1,700 kilometers from China, is reported to have surpassed its fuel consumption rate by about 160% last year. Irkutsk Governor Igor Kobezev pointed to the “snow-like increase” in the use of force in jurisdiction, blaming illegal crypto-mining activity by the departure of miners from China.

One of the largest regions of Siberia, the Irkutsk region is rich in energy resources, with several large hydroelectric plants in cities such as Irkutsk, East-Ilimsk and Bratsk. There are some crypto mining data centers in the region by Beatriver, the largest crypto mining collocation service provider in the country.

Related: Data center operators have no problem with the new Russian crypto crackdown

Igor Ranets, founder and CEO of Beatriver, told Quintelegraph that the company fully supports the latest initiative of the Ministry of Energy:

“It simply came to our notice then. Moreover, it will help miners enter the legal field, so the state can take the first step towards industrial control, which will ultimately lead to transparency of the entire industry.

Ranets said the company pays for its data center electricity at a business customer rate, “2.5 or 3 times more than an individual.”

Russia has become one of the leaders in Bitcoin (BTC) mining activities since the Chinese mining capitalization. According to the Cambridge Bitcoin Power Consumption Index, Russian bitcoin miners account for 11% of the total global BTC mining hash rate distribution, which is only the best in Kazakhstan and the United States.