Underground Bitcoin Mining Operation Discovered in Dagestan: What Authorities Are Doing About It!

• Russia legalized Bitcoin mining in July, requiring miners to register operations and adhere to established energy consumption limits.

• Recent power outages in Dagestan have been attributed to illegal mining, highlighting the tension between mining and energy resources.

In Dagestan, southern Russia, authorities have uncovered an underground Bitcoin mining operation, prompting local officials to increase their efforts to combat illegal mining activities. This discovery comes amid ongoing electrical outages and preparations for winter, which is expected to begin in November.

Abdulmuslim Abdulmuslimov, the head of Dagestan’s government, noted that owners of mining equipment are developing new strategies to bypass existing laws, including setting up underground farms. His comments coincided with the recent discovery of a hidden mining operation in the Serkogalinsky district. 

A video shared by the government on Telegram shows a narrow room containing more than 15 mining devices.

Владельцы майнинг-ферм в Дагестане стали устанавливать аппараты для незаконной добычи криптовалюты под землей.
На видео – подземная майнинг-ферма, обнаруженная в Сергокалинском районе. Владельцы установки разместили под землей более 15 аппаратов для добычи криптовалюты. pic.twitter.com/rKFuo6HOrS

— Пан Пачковский (@Q0MT6pFmbVqynsM) September 23, 2024

As we previously reported on ETHNews , Russia legalized Bitcoin mining in July, requiring miners to register their operations with regulatory authorities. The law stipulates that only registered legal entities and individual entrepreneurs can engage in this activity. 

Those who do not exceed the established energy consumption limits can mine Bitcoin at home without the need for registration. Additionally, miners are required to negotiate electricity tariffs with the Ministry of Energy.

However, the legislation explicitly prohibits offering or advertising mined cryptocurrencies to an unlimited number of individuals. This regulation grants the government the authority to restrict mining activities in regions with high energy consumption.

President Putin has warned that excessive electricity use by miners could lead to shortages in certain areas.

In Dagestan, recent power outages have been attributed to illegal mining operations, with reports highlighting a case in Kaspiysk where a mining operation consumed energy equivalent to that of a 300-apartment building.

This situation underscores the tension between the growth of cryptocurrency mining and the management of energy resources in the region.