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Authorities Seize Over 1,500 Crypto Mining Rigs in Dagestan Crackdown

15/05/2022 by Idelto Editor

Authorities Seize Over 1,500 Crypto Mining Rigs in Dagestan Crackdown

Law enforcement and other authorities in Dagestan have closed down two illegal crypto farms, confiscating more than 1,500 mining machines. Government agencies in the republic, considered one of Russia’s capitals of underground coin minting, carry out regular raids against such facilities.

Cryptocurrency Miners in Dagestan Accused of ‘Illegal Entrepreneurship’

Officers from the Ministry of Internal Affairs of Dagestan and the Federal Security Service have uncovered a large crypto mining farm in the Russian republic’s capital city, Makhachkala, Tass news agency reported, quoting the ministry. The law enforcement agents have seized 1,476 devices producing digital currencies, a press release detailed.

The department added that the owners of the illegal facility have been also providing services to other miners including installing mining rigs, connecting them to the power grid and providing security. Experts are now working to establish the market value of the confiscated mining equipment as well as the amount of consumed electricity.

The law enforcement officials who raided the crypto farm further noted they are collecting evidence to charge the operators under Part 2 of Art. 171 of the Criminal Code of the Russian Federation, “Illegal entrepreneurship,” and part 2 of Art. 165, “Causing property damage by deception or abuse of trust.”

In the past few years, Dagestan has become a hotspot for illegal and home crypto mining, along with Russian regions such as Krasnoyarsk Krai and Irkutsk Oblast that have maintained low electricity rates. As a result, they have suffered blackouts due to breakdowns, especially in residential areas where the electrical networks are not designed to handle the excessive loads.

In another case, the local power grid operator and distributor, Rosseti Severniy Kavkaz, recently found 95 rigs minting cryptocurrency at a facility of the republic’s water supply utility, Мahachkala Vodokanal. The hardware was installed in a metal container at the Vuzovskoe Ozero pumping station.

The crypto farm had a power capacity of 260 kW and its illegal electricity consumption exceeded 4.5 million kWh, worth more than 26 million rubles (over $400,000). According to an announcement by Rosseti, the farm was set up by a resident of the Dagestan capital who worked in collusion with employees of the water utility.

Authorities in Moscow have been taking steps to regulate crypto mining as a business activity for which Russia has certain advantages like its cheap energy sources and favorable climatic conditions. Lawmakers at the State Duma are currently reviewing a new bill tailored to achieve that. Meanwhile, in an effort to curb mining with household electricity, the Russian anti-monopoly agency has suggested introducing higher electricity rates for those mining at their homes.

Do you expect authorities in Russia’s Dagestan to continue to crack down on cryptocurrency miners? Tell us in the comments section below.

Filed Under: confiscation, consumption, crypto, crypto farm, crypto miners, crypto mining, Cryptocurrencies, cryptocurrency, Dagestan, Electricity, English, equipment, Hardware, illegal, Law Enforcement, Miners, Mining, Mining Farm, mining rigs, News Bitcoin, Police, power, Raid, Russia, russian

Number of Busted Illegal Crypto Mining Farms in Iran Nears 7,000

14/05/2022 by Idelto Editor

Number of Busted Illegal Crypto Mining Farms in Iran Nears 7,000

Authorities in Iran have shut down close to 7,000 unauthorized facilities for cryptocurrency mining in the past two years, local media revealed. According to a report, most of the illegal bitcoin farms were concentrated in five provinces of the Islamic Republic, including Tehran.

Iran Continues Crackdown on Unlicensed Cryptocurrency Mining

Iranian officials have unplugged and disbanded a total of 6,914 crypto farms operating without a mining license. This since authorities started clamping down on the illegal extraction of cryptocurrencies in 2020, the English-language Iranian daily Financial Tribune unveiled this week.

The newspaper quotes a report by Iribnews.ir, which details that these facilities have burned some 645 megawatts of electrical power while minting digital currencies without permission. It has been estimated this equals the annual consumption of three major regions — North Khorasan, South Khorasan, and Chaharmahal-Bakhtiari.

Cryptocurrency mining has been a legal industrial activity in Iran for almost three years now, after the government approved regulations for the sector in July 2019. A licensing regime was introduced and companies that want to get involved in the business need to obtain authorization from the Ministry of Industries.

However, as registered crypto miners are required to buy the electrical energy they need at higher, export rates, many Iranian miners have opted to remain under the radar. They usually connect illegally to the grid and use subsidized electricity to power their mining hardware.

Iran’s Power Generation, Distribution, and Transmission Company (Tavanir) has been going after underground crypto farms, closing them down and confiscating hundreds of thousands of mining machines. If identified, their operators can be fined for damages inflicted on the distribution network and a report revealed last month that the government is preparing to increase the penalties.

The country’s electricity shortages last summer were partially blamed on increased electricity usage for coin minting and even licensed miners were asked to shut down their equipment. They were allowed to resume operations in September but then again ordered to suspend activities in the face of a growing power deficit in the cold winter months.

Do you expect Iran to continue to crack down on unlicensed crypto mining? Tell us in the comments section below.

Filed Under: bitcoin farms, Bitcoin Miners, bitcoin-mining, closed down, consumption, Crackdown, crypto, crypto farms, crypto miners, crypto mining, Cryptocurrencies, cryptocurrency, deficit, Electricity, English, fines, Iran, Iranian, Miners, Mining, mining farms, News Bitcoin, penalties, shortages, shut down, Tavanir

The Future Of Energy Markets According To Bitcoin Miners

06/05/2022 by Idelto Editor

Bitcoin 2022 offered us a glimpse into bitcoin miners’ crystal ball, as they discussed how the industry will impact the energy grid.

Most of the conversations about Bitcoin infrastructure for the past two years have focused on the mining sector’s increasing convergence with traditional energy generators and power companies. At the Bitcoin 2022 conference, a panel hosted by this author discussed this trend and what mining’s continued growth means for electric grids and energy markets. Beyond discussing how a grid works and demystifying some basic information about energy infrastructure, the panelists shared their perspectives on current trends, expected benefits and even some risks from a rapidly-growing mining sector forging long-term and large-scale partnerships with energy companies.

Mining growth has the potential to affect every market that uses energy, which is to say: everything. And this article summarizes some of the key insights shared by the panelists on what that future will look like. All the quotations and referenced comments in this article from the Bitcoin 2022 panel are hyperlinked with timestamps during the panel discussion.

Improved Power Pricing Mechanics

Bitcoin mining is radically changing some fundamental aspects of the power industry, and with these changes come new obstacles to overcome. “[Mining] is fundamentally an innovative approach to consuming power relative to what has happened for the last 95 years,” Harry Sudock, vice-president of strategy at GRIID, told the audience.

In 2019, energy companies were highly skeptical and in disbelief about signing power purchase agreements with mining companies like Sudock’s GRIID usually because of the sheer amount of power miners wanted to purchase. Sudock explained that his team would hear responses from power companies to the effect of: “What? We’ve only signed a deal that big once in the last 30 years.”

Today, those phone calls with other power providers are easier. But discussions between miners and power providers can still improve in one key area: rate structures.

“I think that the language between the energy company and the bitcoin miner is adjusting to be kind of the same,” Sudock said. “I think the overall rate structure regime and how does the energy get priced and sold – that’s where the next level of translation and education is happening now.”

In short, everybody — meaning power companies — “gets” what miners are trying to do, but the mechanics of achieving bitcoin mining’s goals are still developing. “There’s still a lot of energy that should be bought by miners today that isn’t yet because of mechanical and structural reasons. But those barriers will be broken down over time,” Sudock said.

Zach Bradford, CEO of CleanSpark, agreed with Sudock. “Nobody knows how to price in that much power for that consistent of a load,” he said, referring to obstacles miners face when structuring deals with power companies.

So how do power companies and bitcoin miners remove these informational and pricing difficulties? The answer is simple: prioritize mining-specific price structure to make it easier for miners to buy power based on their unique load demands.

“If I were the CEO of a power company,” Sudock said, “I would be pitching my board to put in place a bitcoin mining rate structure to attract [miners] to your region, and we will be able to innovate on that process together and get there.”

Building Bitcoin Mining Communities

As conversations between miners and power providers become easier and clearer, all the panelists agreed that the relationships between these two sides of the market will become larger and stronger than ever. As a result, the cities and towns that rely on utilities provided by companies that work with miners will be far more secure, reliable, and advanced than the same infrastructure in other geographic areas.

“I think we’re going to wake up in 10 years, and the towns and counties and cities and communities that have bitcoin mines are going to be thought of in this incredible positive, optimistic way. And the towns that don’t have them yet, are going to be recruiting bitcoin mines to have them there,” Sudock said.

For Sudock, one of the drivers for this improvement is revenue brought to these cities not just from constructing and maintaining a mining facility, but from injecting new revenue into the local economy for power generation that previously no one else would offer.

Bradford agreed, adding he expects to see greater community partnerships involving bitcoin miners. In some of the cities where CleanSpark operates mining farms, for example, Bradford explained how they have directly invested in upgrading electricity infrastructure in those areas, which benefits not only their business but also each business and resident connected to that grid.

“I think you’re going to see communities that embrace bitcoin mining thriving,” Bradford said.

Creating A Better Electric Grid

Because bitcoin miners want to buy so much power all the time, the electric grid’s current infrastructure needs to be updated and expanded at the same pace miners and the Bitcoin network’s hashrate are growing. For the panelists, this — building a better grid — will be one of the biggest hallmarks of mining’s positive effects on energy markets and the grid.

“What a lot of people don’t realize is how fragile our grid is,” Bradford told the audience. A key reason for this is simply the age of existing grid infrastructure. But miners “can interact in a way that can improve grid health,” he explained. And because miners are a unique type of power customer, their load demands create opportunities for mining companies to fund and build new electric infrastructure.

“The age of our grid is a problem, and somebody has to pay for it. I think bitcoin miners are very well positioned because of the profits we make and the incentives we have to […] actually improve the grid across this whole nation,” Bradford said.

Mining shouldn’t be thought of as an exogenous force affecting change on energy infrastructure though. It is the grid. “Bitcoin mining is energy infrastructure. That’s what it is,” Paul Prager, CEO of TeraWulf, told the audience. And as power consumers (miners) and power producers (generators) become more vertically integrated over the coming years, Prager said, “You’ll see massive improvements in the grid.”

Why? Because energy transmission is regulated, and incentives are very low for outside investment in transmission improvements. But “miners will invest in it because they want quality electricity so they can mine all the time,” Prager explained. And this improved infrastructure will not only serve miners. It will serve everyone that uses power.

Miners are heavily incentivized to provide good behavior into the energy market and the mining energy consumption profile, more so than any other large-scale power consumer, Sudock said.

In short, because they want to consume as much power as possible, miners are willing to invest in new infrastructure and demonstrate good consumer behavior to get the power they want, which marks a new, net-positive type of user in the energy market. And power companies at their industry’s leading edge are “being proactive about having relationships with miners,” Sudock said.

Conclusion

Bitcoin mining introduces a revolutionary way to price, consume, and build infrastructure for electricity. With aging grids and exponentially increasing demand for electricity, all the panelists agreed that the services and investments that miners can offer to power grids around the world will cause nothing short of a historic reconstruction of electricity infrastructure and an improvement in electricity generation and transmission for all types of power consumers. In short, mining is revolutionizing the energy market as much as it has disrupted currency markets.

This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Filed Under: Bitcoin Magazine, Energy, English, Feature, Markets, Marty's Bent, Miners, Mining, Power grid

Uzbekistan President Issues Decree Regulating Cryptocurrencies, Mining and Trading

01/05/2022 by Idelto Editor

Uzbekistan President Issues Decree Regulating Cryptocurrencies, Mining and Trading

The government of Uzbekistan has moved to expand its crypto regulations through a decree signed by President Shavkat Mirziyoyev. The document provides definitions for terms like crypto assets, exchange, and mining, and determines the main regulatory body for the industry.

Agency Under President Mirziyoyev to Oversee Crypto Market in Uzbekistan

Uzbekistan’s head of state, Shavkat Mirziyoyev, has signed a new decree expanding the regulatory framework for the Central Asian nation’s crypto space. Its stated goal is to further develop digital technologies, create favorable conditions for entrepreneurship and improve the legislation in this sphere.

The National Agency for Project Management under the president has been transformed into National Agency for Perspective Projects, Forklog reported, quoting the document. The NAPP will become the country’s main crypto watchdog.

The regulatory body has been tasked to implement the state policy in the crypto economy and ensure investors’ rights are protected. It will also take charge of introducing blockchain technologies to the public sector and combatting money laundering, terrorist financing and weapons proliferation through cryptocurrencies.

The decree defines crypto assets as property rights representing a collection of digital records in a distributed ledger that have value and owner. Starting from Jan. 1, 2023, Uzbekistan’s citizens and companies will be allowed to buy, sell and exchange cryptocurrencies through crypto service providers.

The President’s order lists a number of entities that fall under this category, including digital asset exchanges, mining pools, crypto depositories, and crypto stores. They will be required to register as local businesses and obtain licenses or mining certificates from the government agency.

Uzbekistan legalized crypto trading in 2018 but in late 2019 the government banned local residents from purchasing cryptocurrencies. They could only sell. In November, 2021, citizens were allowed to trade crypto assets for national currency on licensed domestic crypto exchanges while non-residents were permitted to exchange digital coins for foreign fiat.

Decree Bans Unauthorized Mining, Minting of ‘Anonymous’ Cryptos

Only registered firms will be able to mine cryptocurrency in Uzbekistan. Mining farms will pay a higher electricity tariff during peak hours of consumption. Unauthorized mining will be prohibited. The ban applies to the minting of what the decree calls “anonymous cryptocurrencies” as well and any transactions with them.

Just as before, Uzbekistanis will not be permitted to use or accept cryptocurrencies as a means of payment for goods and services within the country. On the positive side though, crypto-related transactions of individuals and companies will not be subject to taxation, according to the document dated April 27, 2022.

Tax breaks will also be provided to participants in a new regulatory sandbox that the NAPP will establish to pilot crypto projects. The entities involved in the trials will also be exempt from other obligations to the state budget, including customs payments other than the duties for imported hardware and software.

What are your thoughts on Uzbekistan’s new crypto regulations? Let us know in the comments section below.

Filed Under: crypto, crypto exchanges, crypto miners, crypto mining, Cryptocurrencies, cryptocurrency, Decree, English, Exchanges, Investors, licensing, Miners, Mining, News Bitcoin, Payments, registration, Regulation, Regulations, trading, Uzbek, Uzbekistan, Uzbekistani

Bill Regulating Crypto Mining Submitted to Russian Parliament

30/04/2022 by Idelto Editor

Bill Regulating Crypto Mining Submitted to Russian Parliament

A draft law tailored to regulate cryptocurrency mining has been filed with the lower house of Russian parliament, the State Duma. The legislation provides a legal definition for the extraction of digital currencies and envisages the establishment of a register for miners.

Russian Lawmakers to Review Legislation Enforcing Rules for Crypto Mining Sector

The draft of the new federal law “On Mining in Russian Federation” has been submitted to the Duma on Friday, April 29, according to the website of the house. The bill aims to bring the crypto-related industry out of the “grey” economy in Russia, a country rich in energy resources and favorable climatic conditions for mining.

The authors of the bill describe the minting of digital coins as an activity using information infrastructure and equipment located in the Russian Federation, which results in the creation of digital currency. They also introduce legal definitions for the circulation of digital currencies, mining pools and operators mining facilities.

The law provides for the creation of a special register for cryptocurrency miners that will be maintained by an authorized federal body. Private individuals involved in bitcoin mining will be able to register as individual entrepreneurs or self-employed persons if their electricity consumption exceeds certain limits set by the government.

Only registered entities and persons will be allowed to mine, RBC Crypto reported, quoting the document. The operators of mining facilities in Russia will be required to keep records of the minted cryptocurrencies, their types, any contracts with other entities and buyers of the coins, exchange operators, payment systems, and banks.

If deputies in the Duma adopt the law, a one-year “amnesty” will be announced for registered miners, within which they will be able to sort out any outstanding issues with customs clearance for imported hardware, pay relevant taxes and comply with applicable regulations. That includes the recently adopted rules for money transfers outside the Russian Federation.

Russian authorities have been working to develop a comprehensive regulatory framework for cryptocurrencies. A bill “On Digital Currency” has been prepared by the Finance Ministry to fill the legal gaps remaining after the enforcement of the law “On Digital Financial Assets” last year. The department recently revised the draft to clarify certain aspects pertaining to crypto mining. The Russian parliament is expected to approve this law, along with tax amendments, during its spring session.

Do you think the Russian parliament will adopt the mining law together with the other crypto legislation? Tell us in the comments section below.

Filed Under: bill, Bitcoin, crypto, crypto miners, crypto mining, Cryptocurrencies, cryptocurrency, draft law, English, Law, Legislation, Miners, Mining, News Bitcoin, parliament, Regulation, Regulations, Russia, russian, State Duma

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