Russian Power Company Reports $14M Loss From Illegal Crypto Mining in 2024

Russian electricity provider Rosseti Group reported losses of over $14 million (1.3 billion rubles) in 2024 due to unauthorized crypto mining. These illegal operations cause power congestion, reducing voltage levels and potentially damaging electrical appliances and equipment.

According to state-owned news outlet TASS, the damage affected multiple power grids across the country. This has forced Russian authorities to intensify efforts to combat illegal mining operations.

North Caucasus Sees Highest Losses

According to TASS, the most significant losses were recorded in the North Caucasus grid, amounting to over $6.5 million (600 million rubles). The Novosibirsk network reported damages of $4.4 million (400 million rubles), while the Center and Volga regions recorded losses totaling $1.3 million (120 million rubles), as per the TASS report.

The company identified the largest individual case of illicit mining in Novosibirsk, where a single operator ran approximately 3,200 mining devices, consuming electricity on an industrial scale. The operation resulted in estimated losses of $2.2 million (197 million rubles), Rosseti disclosed.

Measures Against Illegal Crypto Mining

In response to the illegal operations, the authorities have intercepted 130 cases of unauthorized electricity use, with over 40 incidents under review as potential criminal offenses. Those found guilty could face prison sentences under Russian law.

As part of broader efforts to regulate power consumption, Russian authorities imposed seasonal mining restrictions in various regions, including the North Caucasus and the Zabaikalsky region in Siberia. The ban, effective annually from November 15 to March 15, will remain in place until 2031. 

Additionally, the Ministry of Energy recently announced plans to introduce a mandatory registry for cryptocurrency mining equipment to monitor domestic mining activities more effectively.

HashFlare Co-Founders Admit Crypto Mining Fraud Scheme

Meanwhile, in a separate case, HashFlare co-founders Sergei Potapenko and Ivan Turõgin have admitted to orchestrating a fraudulent mining scheme that defrauded investors of more than $577 million. They now face a maximum prison sentence of 20 years, with their sentencing set for May 8 by a federal district court judge.

As reported by CoinTab, Potapenko, and Turõgin misled customers by offering contracts that supposedly entitled them to a share of HashFlare’s mining operations. However, the company lacked the necessary computational power to mine cryptocurrencies at the scale they claimed. 

Between 2015 and 2019, the duo sold contracts worth hundreds of millions of dollars, despite HashFlare having less than 1% of the advertised computing capacity. They maintained the deception by manipulating HashFlare’s web dashboard to display false mining profits. 

Meanwhile, they funneled customer funds into luxury cars, real estate, and cryptocurrency acquisitions.