Authorities and electric utilities in various regions of Russia have shut down illegal crypto mining fields, seized hardware, and taken operators to court.The action against the coin minting facility comes amid discussions about a proposal to introduce criminal liability for miners who violate a forthcoming industry law.
Launch Bitcoin, Sunday (19/3/2023), police and power suppliers have discovered and dismantled illegal crypto mining installations in Siberia and Southern Russia, local crypto news outlets reported this week, citing authorities. In one case, organizers of a mining company were accused of stealing large amounts of electricity.
Employees of the North Caucasus Rosseti discovered a fairly large improvised mining field in the Shpakovsky district of Stavropol Krai. Together with law enforcement, they seized 66 ASIC miners, the region’s power company announced Friday.
A resident of the village of Nadezhda, who placed crypto adding equipment in his house and connected it to the power grid, can now face criminal charges for running the underground facility. Electrical engineers estimate it burns 954,000 kWh of electricity for more than 6 million rubles (USD 78,000 or Rp 1.19 billion).
A similar installation was discovered in the attic of a school in the city of Shelekhov, Irkutsk Oblast, when police responded to reports by the local power company of unusually high electricity consumption and noise coming from the roof of the building. Officers seized 25 mining units installed by the school’s electrician and a friend who is an IT specialist.
Such cases are quite common in the Siberian region, dubbed the mining capital of Russia, where many people mine in cellars, garages and dachas, trying to make money using subsidized electricity in residential areas. According to a report in February, more than 1,000 lawsuits have been filed against in-house crypto miners in Irkutsk.
This week, the Prosecutor’s Office of Tomsk, another Siberian oblast, announced it has approved charges in a criminal case against seven local residents who organized to illegally connect several places with crypto mining equipment to the power grid. They are accused of causing damage to the electricity supplier of around 24 million rubles (more than USD 310,000).
The latest example of Russian authorities banning illegal mining comes as lawmakers and government officials prepare to resubmit a revised bill designed to regulate the activity. The amendments that introduced criminal liability and harsh penalties for so-called “gray” miners who avoided taxation sparked a backlash from the crypto industry.
Previously, the Bitcoin (BTC) market capitalization had increased by USD 194 billion or around IDR 2,980 trillion (assuming an exchange rate of IDR 15,363 per US dollar) in 2023.
On a year to date (ytd) basis, bitcoin’s market cap is 66 percent ahead of the top banking stocks on Wall Street, mainly as fears of a global banking crisis increase. The six largest US banks, JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Goldman Sachs (GS), have lost nearly USD 100 billion or around IDR 1,536 trillion in market value since the beginning of the year.
Bank of America stock was the worst among Wall Street’s banking players, with a nearly 17 percent YTD drop in market cap. Goldman Sachs trailed with losses of nearly 12 percent YTD, followed by Wells Fargo down 9.75 percent, and JP Morgan Chase down 1 percent. Launching Ychart data, Bitcoin market capitalization is currently at the level of USD 503.47 billion. Up 57.7 percent from last year’s position of USD 319.25 billion. US bank valuations have fallen amid the ongoing US regional banking collapse.
Including last week’s announcement that Silvergate, a crypto-focused bank, was closing operations. Followed by takeover of Signature Bank and Silicon Valley Bank by regulators. The crisis widened with the near collapse of the First Republic Bank, which was saved at the last moment through an injection of USD 30 billion or around IDR 460.91 trillion from 11 major US banks.
Bitcoin’s rise amid the ongoing US banking crisis seems similar to its reaction during the Cypriot and Greek financial crises. Launching Cointelegraph, Sunday (19/3/2023), the price of BTC grew by up to 5,000 percent in the midst of the Cypriot financial crisis in 2013. Driven by Cypriot banks’ exposure to regional real-estate firms with excessive clout.
The situation was so dire that Cypriot authorities, in March 2013, closed all banks to avoid a bank run. Meanwhile, when Greece faced a similar crisis in 2015 and imposed capital controls on its citizens to avoid bank runs, the price of Bitcoin rose 150 percent during that period.