Persistent Illegal Mining in Kabardino-Balkarian Republic
Residents of a small Russian republic in the North Caucasus are persistently minting cryptocurrencies in defiance of stringent restrictions on the activity. Illegal mining has caused over a billion rubles’ worth of damage to utilities in Russia’s southernmost region this year alone. This is occurring despite an ongoing crackdown that already relies on high-tech surveillance and support from federal security agents.
A report from the Russian Southwest demonstrates the difficulty in eradicating an additional source of income for a population with limited legal economic opportunities. Despite the strictest ban possible, people in the Kabardino-Balkarian Republic (KBR), a small region of less than a million inhabitants in the Russian Caucasus, are still mining using stolen electricity.
The local power distribution company frequently discovers mining machines in unusual locations, as reported by Vesti Kavkaza. Employees of the utility recently announced their latest discovery: more than 20 mining rigs minting digital coins in abandoned buildings in one of the republic’s villages. These machines were placed in insulated boxes to suppress noise and ensure concealment.
According to the local branch of Rosseti North Caucasus, the operators of these discovered devices stole 764,000 kilowatt-hours of electricity from the state. This translates to over 5.8 million rubles (over $75,000) in financial losses, based on calculations released in a press statement.
Specialists from Kabbalkenergo stopped an electricity mining theft in the village of Stary Cherek in the Urvan District. Two dilapidated, non-residential buildings located on an abandoned site were illegally connected to the grid.
Organizers of these small-scale mining operations, which are harder to detect due to their relatively low energy consumption, often choose former industrial or agricultural sites for their clandestine farms. These locations frequently still provide access to electricity transformers.
Law enforcement agencies and the judiciary will determine the fate of the rogue cryptocurrency miners in Kabardino-Balkaria. Police are preparing to open a criminal case under an article of the Russian Criminal Code that prosecutes the “causing of property damage by fraud or abuse of trust on an especially large scale,” an offense punishable by up to five years in prison.
Russia Intensifies Crackdown on Illegal Mining
Russia regulated mining in 2024, establishing it as the first legalized crypto activity within its jurisdiction. However, the high concentration of mining enterprises in certain parts of the country has been attributed to growing energy deficits.
Since the beginning of the year, the minting of digital currencies has faced temporary restrictions during periods of peak electricity consumption or permanent bans for extended periods in approximately a dozen Russian regions, spanning from Siberia to occupied Ukraine.
The most stringent restrictions are applied to almost all Russian republics in the North Caucasus, including the BRK, Chechnya, and Dagestan. It is believed that illegal mining in these areas caused 1 billion rubles ($13 million) in damages to local power grids and utilities in 2025, according to information released by the Telegram channel Mash in late November.
Under current Russian law, both companies and individual entrepreneurs are permitted to engage in the mining business, provided they register with tax authorities. However, a significant majority have yet to comply. A recently proposed amnesty aims to encourage more participants to move out of the shadow economy.
While mining has recently been recognized as a growing Russian export, substantial enough to be included in the country’s balance of payments, an estimate released earlier this week suggests Russia will need to invest $77 billion in new generation capacities to meet its own energy demands and those of AI data centers.
Meanwhile, Russian authorities have begun employing increasingly sophisticated methods to locate illegal crypto farms. These methods include technology for tracking energy consumption and internet traffic, as well as drones equipped with thermal vision cameras.
Officers from the Federal Security Service (FSB) are now frequently involved in joint raids to dismantle such operations. In one such raid last week, they apprehended a large mining facility in Chelyabinsk, reportedly owned by the son of a prominent politician.