Dagestan Cracks Down on Underground Crypto Mining as Power Grid Struggles Intensify

Dagestan is ramping up efforts to combat illegal cryptocurrency mining, which is straining the power grid and causing infrastructure damage. Officials are calling for stricter regulations to address the issue as miners bypass controls by operating underground.

Dagestan, a republic in southern Russia, is facing increasing challenges from illegal cryptocurrency mining operations, which are causing significant strain on the region’s power grid. Local authorities are stepping up efforts to address the situation, as underground mining activities have recently led to infrastructure damage, including a substation fire in the capital city. The government is calling for stricter enforcement measures as miners continue to find ways to bypass regulations.

The illegal operations have been identified as a primary cause of power outages across Dagestan, where miners have been setting up installations without proper authorization. Many of these operations are hidden underground, making it difficult for officials to detect them. Dagestan’s Prime Minister, Abdulmuslim Abdulmuslimov, emphasized the severity of the issue, stating that illegal miners are placing significant pressure on the power grid.

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“The owners of illegal cryptocurrency mining installations are constantly finding new ways to circumvent the law,” Abdulmuslimov said. “These mining farms are being installed underground, making it difficult for authorities to regulate them properly.”

In response, the government has released footage of investigators inspecting one such illegal mining installation, revealing rows of cooling fans and mining hardware concealed beneath the surface.

Stricter Regulations on the Horizon

Dagestan’s crackdown on illegal crypto mining comes ahead of Russia’s new cryptocurrency mining legislation, which will go into effect on November 1, 2024. The new law, signed by President Vladimir Putin, will require cryptocurrency mining companies to register with the finance ministry, while individuals must report their mining activities to the financial monitoring authority. The legislation aims to bring greater oversight to the sector, with the goal of mitigating the impact of unauthorized mining on the nation’s energy infrastructure.

Local officials are hopeful that the new law will help reduce the damage caused by illegal mining operations. However, they remain concerned about the innovative methods miners use to evade detection, particularly the trend of building mining farms underground.

Growing Concern Over Power Grid Strain

The increased strain on Dagestan’s power grid has prompted calls for immediate action. Officials warn that if the situation is not brought under control, further infrastructure damage and power outages could occur. The recent substation fire in the capital city is a stark reminder of the potential dangers posed by unregulated mining activities.

The government’s efforts to address illegal crypto mining reflect a broader trend in Russia, as the country continues to grapple with the challenges of regulating the growing cryptocurrency sector. As the November 1st deadline approaches, all eyes will be on how Dagestan and other regions implement the new rules to combat illegal operations and protect critical infrastructure.

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