Electricity

Russia, Ukraine Shut Down Several Cryptocurrency Farms

05/12/2021 by Idelto Editor

Authorities in Russia and Ukraine have closed down a number of illegal crypto mining facilities allegedly powered by stolen electricity. The underground farms have been discovered around the capital cities, Kyiv and Moscow, as well as in the Russian republic of Dagestan.

Russia Busts Illegal Mining Farms in Moscow Region and Dagestan

Russian law enforcement and customs agents have recently uncovered the theft of a large amount of electricity from the network operated by Rosseti in Moscow Oblast, the region adjacent to Russia’s capital. Tass broke the news about the operation this week, quoting Ekaterina Korotkova from the Moscow Interregional Transport Prosecutor’s Office. The official explained:

An audit revealed an unauthorized connection to the power grid, theft of electricity and illegal seizure of land for the operation of equipment designed to perform cryptographic calculations related to the mining of digital currencies.

The cost of the illegally consumed electricity used to power the mining hardware exceeds 500,000 rubles a day (almost $7,000), Korotkova detailed. Authorities have launched a criminal case and intend to prosecute the owners of the coin minting facility.

Two cryptocurrency farms were also busted in Dagestan, a republic of Russia situated in the North Caucasus. In late November, the Komsomolskaya Pravda newspaper reported that a large mining operation had been found in a mountainous region. Preliminary data from the investigation suggests that its unknown operators have caused damages of an estimated 1 million rubles (over $13,000).

Local police have also uncovered a mining enterprise in Botlikh district where miners were connected to the grid without permission. According to a report by Forklog quoting Dagestan’s interior ministry, the crypto farm had been set up since November and run by a 35-year-old resident of Dakhadayevsky district who stole power worth 257,000 rubles (around $3,500).

The law “On Digital Financial Assets,” which went into force in January, regulated some crypto-related activities in the Russian Federation but cryptocurrency mining, among others, isn’t one of them. Calls have been mounting among officials in Moscow this year to recognize the business as an entrepreneurial activity and tax it accordingly.

Underground Crypto Farm Found in Kyiv Region, Ukraine

Meanwhile, the Security Service of Ukraine (SBU) announced Friday it had discovered an illegal mining facility in Kyiv Oblast. According to the main Ukrainian law enforcement agency, three local residents have installed a number of ASICs in a hangar they rented in the Buchansky district of the region bordering the capital. They have allegedly used electrical energy worth 3.5 million hryvnia (more than $128,000).

The rising popularity of cryptocurrencies has turned Ukraine into a leader in adoption in recent years and the government has been taking steps to legalize “virtual assets.” While bitcoin mining is not banned, it isn’t yet regulated. This year, the SBU has been going after miners taking advantage of the country’s electricity supply network, shutting down a number of crypto farms in various regions, including a large data center in central Ukraine last month.

Do you expect Russia and Ukraine to regulate cryptocurrency mining in the near future? Tell us in the comments section below.

More Regulations Proposed to ‘Streamline’ Mining Sector in Kazakhstan

28/11/2021 by Idelto Editor

Authorities need to expand the regulatory framework for cryptocurrency miners, a member of the parliament in Kazakhstan has suggested. The additional rules should streamline their activities and help correct the forming public opinion that they are responsible for the country’s electricity deficit.

Crypto Mining in Kazakhstan Needs Additional Regulations, Lawmaker Says

New regulatory requirements and criteria for the crypto mining industry must be adopted to streamline its operations while developing a comprehensive ecosystem for digital assets. That’s according to a recent statement by Dyusenbay Turganov, member of the Mazhilis, the lower house of Kazakhstan’s parliament.

Quoted by the local business news portal Inbusiness.kz, the deputy noted that mining has been a legal industrial activity since the adoption of legislative amendments in 2020. He also reiterated that starting from January 2022, miners operating in accordance with the law will pay a new type of tax to the budget.

“Nevertheless, against the backdrop of a brewing power shortage, society has an incorrect, misled opinion about digital mining as the culprit of the energy crisis and it seems that government agencies are not addressing this problem to the required extent,” Turganov elaborated. He also commented that “effective measures and their results are not visible, there is no due coordination of government bodies in this important process.”

‘Gray Miners’ Blamed for Power Shortage, Various Solutions Considered

Kazakhstan has registered a growing deficit of electrical power, exceeding 7% in the first nine months of the year, which has been largely blamed on the increasing consumption in its growing mining sector. In November, many consumers, including households, experienced blackouts, and restrictions were imposed in the south of the country. To deal with the shortages, Kazakhstan had to import electricity from neighboring Russia at a higher tariff.

Dyusenbay Turganov insists, however, that it’s uncontrolled electricity consumption by illegal mining farms that’s the main reason for the current situation. To solve the issue, the government has to step up efforts to identify so-called “gray miners” and suppress their illegal activities, he added. That would allow authorities to limit their consumption of power which is badly needed by legitimate consumers, the lawmaker stressed. Turganov has been quoted as stating:

It is needed to develop and adopt the necessary requirements and criteria for streamlining the activities of miners and the development of an integrated ecosystem for the circulation of digital assets based on the AIFC [Astana International Financial Centre] to reduce the share of the shadow economy.

The parliamentarian proposes that miners get involved in the development of renewable energy sources in Kazakhstan and help deal with imbalances in the nation’s power supply system. Authorities should also take steps to expand the country’s generating capacities, he urged.

Turganov’s suggestions come after a group of his colleagues in the Mazhilis proposed, in early October, the establishment of a state register for cryptocurrency farms operating in the country. Worried by the growing consumption of energy in the sector, the lawmakers also want to charge miners a higher price for the electricity they use to mint digital coins.

Do you think Kazakhstan will introduce additional regulatory requirements for cryptocurrency miners? Share your expectations in the comments sections below.

Norway Mulls Backing Sweden’s Call for Euro Ban on Crypto Mining

18/11/2021 by Idelto Editor

The government in Norway is considering ways to limit the environmental impact of cryptocurrency mining and may support Swedish proposals to that end, including a European ban on proof-of-work mining. The European Commission has revealed it is already working to promote a transition to “more sustainable” protocols.

Extensive Use of Renewable Energy for Mining Is Hard to Justify, Norway Minister Says

Authorities in Norway are mulling over potential policy measures to deal with the effects of crypto mining on the environment, the country’s minister responsible for local government and regional development has indicated. As part of the review, the Norwegian government intends to look into solutions recently put forward by Swedish regulators and work for common European rules. Speaking to Euronews Next, Minister Bjørn Arild Gram also stated:

Although crypto mining and its underlying technology might represent some possible benefits in the long run, it is difficult to justify the extensive use of renewable energy today.

Both countries, along with another Nordic nation, Iceland, have in the past few years become popular destinations for cryptocurrency miners. The region boasts abundant renewable energy resources and maintains relatively low electricity rates. According to Eurostat data for the first half of 2021, Norway offered the cheapest electricity for non-household consumers in the European Economic Area (EEA), with over 90% of its energy coming from hydroelectric power generation.

Bjørn Gram’s statement comes after the directors of Sweden’s financial services and environmental protection agencies called for imposing a ban on proof-of-work mining across the European Union, after a multifold increase of energy usage by bitcoin miners in the country this year. “Sweden needs the renewable energy targeted by crypto asset producers for the climate transition of our essential services, and increased use by miners threatens our ability to meet the Paris Agreement,” the officials warned.

“Overall, we want our renewable energy to be used in a way that creates value and that supports the transition to a climate neutral society,” Minister Gram elaborated. His comments are part of a heated discussion in Norway regarding the use of renewable energy to power digital coin minting after Oslo introduced tax breaks for data centers in 2016. The country’s new environment minister, Espen Barth Eide, has in the past expressed concerns over Norway becoming the “world’s Bitcoin mine” at the expense of its own power-intensive industries.

European Commission Urges Crypto Miners to Move Away From Proof-of-Work Concept

Regional Development Minister Bjørn Gram did not provide any specific details regarding the regulatory policies the Norwegian government is currently considering. But if Norway decides to follow in the footsteps of Sweden, it may result in a crackdown on crypto mining operations that require significant amounts of energy.

Meanwhile, the European Commission (EC), which would be responsible for enforcing crypto regulations in the EU, has admitted that it’s already encouraging the crypto mining industry to “migrate applications” from energy-intensive proof-of-work blockchains to less demanding protocols like proof-of-stake and hybrid consensus models, Euronews Next revealed. A spokesperson for the executive body told the publication that the EC is working to promote “more sustainable forms of blockchain technologies.”

The Commission, the representative added, has “ambitious emission reduction targets” and promotes the advancement of less energy-intensive blockchain technologies through funding for startups and direct development of a public sector blockchain network. Although the Paris Climate Agreement, referred to by Swedish regulators, does not ban crypto mining, Brussels is aware of developments in jurisdictions like China and will discuss the matter with EU member states, the official added.

Do you think Norway, Sweden, and the EU will impose restrictions on energy-intensive crypto mining? Share your expectations in the comments section below.

China Targets Crypto Mining at State-Owned Enterprises, Threatens Punitive Measures

17/11/2021 by Idelto Editor

Authorities in China are continuing to crack down on activities linked to cryptocurrencies which they consider illegal. The country’s top economic planning body has clearly indicated it intends to go after large-scale cryptocurrency mining taking place at government-operated industrial facilities.

State Firms Mining Crypto in China to Face Higher Electricity Bills

China’s National Development and Reform Commission (NDRC) announced Tuesday it plans to concentrate on the “comprehensive rectification” of state-run industrial enterprises involved in the extraction of digital currencies. The initiative is part of an ongoing crackdown on crypto-related operations that are banned in the People’s Republic.

The economic planner cited concerns over energy waste associated with crypto mining as well as financial activities linked to cryptocurrencies, reiterating these are deemed illegal in China. Virtual currency does not have the same status as legal currency, the commission emphasized, quoted by CGTN, the international arm of the national broadcaster, CCTV.

The NDRC noted that the disruption of crypto mining activities at state-owned companies will facilitate the optimization of China’s industrial structure. The commission also believes this will boost energy conservation and the reduction of emissions while helping the nation to achieve its carbon neutrality goals on schedule.

Digital coin minting consumes a lot of energy, the planning body further remarked. In order to discourage government-run entities from spending a lot of power on it, those that are now using subsidized electricity for crypto mining may face higher electricity rates in the future. Meng Wei, a spokesperson of the NDRC, revealed at a press conference that the commission intends to study the possibility of levying “punitive” tariffs as part of its preventive measures.

In early October, the National Development and Reform Commission proposed to add cryptocurrency mining to the country’s latest draft of the “Negative List for Market Access,” jointly released with the Chinese Ministry of Commerce. The move would make the industry off-limits to investors. The 2020 edition of the list consists of 123 industries, as Bitcoin.com News reported.

China banned cryptocurrency trading in 2017 but authorities did not interfere with crypto mining until earlier this year. In May, the State Council, the cabinet of ministers in Beijing, clamped down on the sector following President Xi Jinping’s pledge for the country to achieve carbon neutrality in the next four decades. In September, the People’s Bank of China reiterated its hardline stance on cryptocurrencies.

Along with the signing of the infrastructure bill by U.S. president Joe Biden, which concerns crypto taxation, the latest announcement by the NDRC in China has likely influenced cryptocurrency markets, which shed billions of dollars in capitalization. Major cryptocurrencies fell on Tuesday, when the coin with the largest market cap briefly dipped below $60,000. Bitcoin (BTC) is trading at a little over $60,500 at the time of writing.

Do you expect China to continue its crackdown on cryptocurrency mining? Let us know in the comments section below.

Swedish Regulators Call for EU Ban on Crypto Mining, Power Company Defends Industry

10/11/2021 by Idelto Editor

Alarmed by the rising energy needs of cryptocurrency mining, Sweden’s financial and environmental regulators have recently proposed an EU-wide ban on proof-of-work coin minting. The Swedish officials believe this would encourage a move towards a more energy-efficient extraction of bitcoin while supporting the transition towards climate neutrality in Sweden and Europe. A state-run power company warns, however, that restrictions could have an adverse effect on global carbon emissions.

Expensive Bitcoin Generates More Emissions, Swedish Authorities Allege

The rising value of crypto assets attracts more businesses to join the competition to solve the encryption puzzle at the core of cryptocurrency mining while the proof-of-work method is the main reason for its high energy consumption. The remarks come from a joint statement by the director generals of Sweden’s Financial Supervisory Authority and Environmental Protection Agency, Erik Thedéen and Björn Risinger.

The two officials have recently issued a call for the prohibition of energy-intensive mining of digital currencies across the European Union, citing various concerns including the migration of miners to other destinations after China’s crackdown. In the Nordic region, for example, their appetite for renewable energy could undermine the transition towards climate neutrality and the efforts to meet the Paris Agreement goals.

The government executives quote different estimates highlighting the power-hungry nature of crypto mining such as the one that Bitcoin and Ethereum together use around twice as much electricity as Sweden or the claim that a mid-size electric car can be driven 1.8 million kilometers with the energy burned to mint a single bitcoin. They further point out:

Our conclusion is that policy measures are required to address the harms caused by the proof-of-work mining method. It is important that both Sweden and the EU can use our renewable energy where it provides the greatest benefit for society as a whole.

Thedéen and Risinger believe that governments have several policy options to address the issue. “For instance, Sweden and other countries could introduce a tax on the energy-intensive production of bitcoin. Another option is to communicate more widely around the climate problems related to crypto-assets, in the hope that this will lead to both producers and investors demanding a shift to mining methods that require less energy,” they elaborate.

As demand for crypto assets continues to grow at a fast pace, however, the Swedish officials are worried that neither of these moves would adequately limit the harm caused to the environment. “The emissions need to stop here and now, and renewable energy needs to be used for the climate transition of essential services.”

The heads of the Swedish regulatory bodies have called on the EU to consider a blanket ban on proof-of-work mining. Other methods, they insist, can reduce energy consumption by over 99%. The directors want Sweden to halt the establishment of new facilities employing energy-intensive coin minting methods. They also propose to prohibit companies from trading and investing in crypto assets mined with a proof-of-work process to advertise themselves and their activities as sustainable.

Such steps could encourage crypto miners to relocate to other countries and increase global carbon emissions anyway, the authors of the proposal have admitted. Nevertheless, they think Sweden and the EU should set an example for other countries and regions. Thedéen and Risinger emphasize:

A ban on the proof of work mining method within the EU could be an important first step in a global move towards a greater use of more energy-efficient crypto mining methods. It would also mean that our renewable energy is used as efficiently as possible in order to support the transition towards climate neutrality.

According to the statement published by Finansinspektionen, electricity consumption in Sweden’s bitcoin mining sector has increased significantly, already reaching 1 TWh annually. This amount of energy would be sufficient to satisfy the power needs of at least 200,000 households, the Swedish regulators calculate.

Meanwhile, the country’s state-owned power generation company Vattenfall has defended cryptocurrency mining. It views bitcoin extraction as an industrial activity that can actually help electricity producers to overcome some of the challenges they are facing. Henrik Juhlin, head of Physical Power Management at Vattenfall, told the Swedish public broadcaster SVT that mining has the potential to balance loads on electrical grids.

This is the case when power supply varies, sometimes exceeding demand, and is especially valid for countries like Sweden which increasingly use renewable sources. Wind and solar power generation depend on factors that are beyond human control and consumption by crypto farms can play the role of a buffer at times when there is a surplus of available electricity. Juhlin also warned that banning crypto mining in the EU could in fact increase carbon emissions around the world as the industry could relocate to regions relying on fossil fuels such as coal.

Do you think Sweden’s proposal for an EU ban on proof-of-work crypto mining will gather support from other member states? Share your thoughts on the subject in the comments section below.