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Illegal crypto mining is inflicting billions of rubles in damage on Russia’s economy each year, according to lawmakers, underscoring the growing cost of underground digital asset operations even after the country formally legalized the industry.
Russian officials estimate that illegal crypto mining is responsible for nearly 20 billion rubles ($250 million) in annual losses, driven by electricity theft, grid overloads and unpaid taxes. The figures were disclosed this week during parliamentary discussions on tightening enforcement against rogue miners.
Nikolay Shulginov, chairman of the State Duma’s Energy Committee, said the scale of illegal crypto mining now represents a national economic issue rather than a localized problem.
“Illegal mining has negative economic effects on a national scale,” Shulginov told RIA Novosti. “Annual damage to the economy through losses in the energy sector exceeds 10 billion rubles, while lost tax revenues reach up to 9.6 billion rubles.”
The estimates were compiled by the Stolypin Institute for the Economy of Growth, a Moscow-based research organization focused on modernization strategies for Russia’s economy.
Shulginov added that illegal crypto mining disrupts electricity distribution, strains aging infrastructure and affects essential services. Hospitals, schools and new housing developments are often the first to feel the pressure when mining farms siphon power from local grids.
Russia legalized cryptocurrency mining in late 2024, allowing companies and individual entrepreneurs to operate legally if they register with the Federal Tax Service (FNS) and pay taxes. Private individuals were also permitted to mine without registration, provided their electricity usage stayed below 6,000 kilowatt-hours per month.
Despite the new framework, illegal crypto mining continues to thrive. Officials say fewer than one-third of miners have registered with authorities, leaving most of the sector operating in the shadows.
To address the gap, policymakers have floated proposals ranging from tax amnesties to simplified registration processes, but results so far have been limited.
Low electricity prices—often subsidized—have made several Russian regions magnets for mining operations, both legal and illegal. That influx has fueled power shortages and forced authorities to impose sweeping restrictions.
Mining has been fully banned until at least spring 2031 in 10 regions, including parts of the North Caucasus, the Far East, and Russian-occupied areas of eastern Ukraine. Two additional regions are preparing to introduce year-round bans in 2026.
Yet even with these measures in place, illegal crypto mining has proven difficult to stamp out.
“The mining bans introduced at the beginning of 2025 have not produced significant effects,” Shulginov admitted. “They freed up only about 400 megawatts of capacity.”
Irkutsk Oblast, often dubbed Russia’s mining capital, continues to register the highest concentration of illegal crypto mining, despite increasingly strict enforcement.
Originally, authorities restricted mining only during winter months in southern Irkutsk. The ban was later expanded to cover the entire year. Still, inspections in 2025 uncovered warehouses packed with thousands of confiscated mining rigs.
“Committee members who visited the region were shown storage facilities filled with seized equipment,” Shulginov said, pointing to the scale of the underground industry.
The North Caucasian Federal District is another hotspot for illegal crypto mining. More than 100 underground farms were dismantled there last year, with Dagestan accounting for roughly 80% of cases.
Rosseti CEO Andrey Ryumin said illegal miners in the region consumed electricity worth 622 million rubles between January and September 2025 alone. Nearly 100 cases of power theft were formally investigated during that period.
“These operations create unacceptable risks for grid stability,” Ryumin said in October, warning that unregulated consumption threatens both industrial users and households.
In response, lawmakers have introduced draft legislation imposing significantly higher fines for illegal crypto mining. Under the proposal, first-time offenders could face penalties of up to 2 million rubles ($25,000). Repeat violations would trigger fines as high as 10 million rubles ($130,000).
Shulginov said criminal liability could be the next step. The Justice Ministry has already suggested prison sentences or forced labor for miners who continue operating without registration.
On Tuesday, the State Duma passed a bill in its first reading that would place oversight of the crypto market, including mining, under the Ministry of Finance.
Supporters argue the move will streamline regulation, reduce bureaucratic barriers and encourage miners to come out of the shadows—reducing the scale of illegal crypto mining while boosting tax revenues.
“This is about legalization, not just punishment,” Shulginov said. “The goal is to create conditions where operating legally makes more sense than hiding.”
Despite new laws and regional bans, officials acknowledge that eliminating illegal crypto mining will take time. As long as electricity remains cheap and enforcement uneven, underground farms are likely to persist.
For now, Russia’s experience highlights a broader challenge facing energy-rich countries: how to regulate a power-hungry digital industry without destabilizing national grids or losing billions to the shadow economy.
