Russia dismantles dozens of illegal crypto farms in the North Caucasus

Dozens of crypto farms have stopped mining this year as a result of an ongoing crackdown on illegal coin minting operations across Russia’s southwest.

The tally from the fight to put an end to the phenomenon comes months after the crypto-related activity was totally banned in this part of the enormous country.

Dagestan takes the lead with 80% of the found farms

Over 100 illegal mining facilities have been discovered since the start of the year in the North Caucasus, the southernmost of Russia’s eight federal districts, the local branch of the national power grid operator Rosseti announced.

With 79 of them, the Republic of Dagestan is by far the territory with the largest concentration. The losses they have inflicted there amount to 89.5 million rubles (over $1.12 million), the company reported.

Another 14 crypto farms, which caused 455.5 million rubles ($5.7 million) in damages, were found in the nearby Republic of Ingushetia, which tops the chart in financial terms.

The rest were spread across other regions in the federal district, including Karachay-Cherkessia, North Ossetia-Alania and Stavropol Krai, Rosseti North Caucasus added, quoted by the official TASS news agency.

Official who inspected their locations established that the mining farms were either illegally connected to the grid, skipping the proper procedures, or bypassing electricity meters.

Installations like these are blamed for excessive loads that the distribution networks are not designed to handle, leading to short circuits and breakdowns, and ultimately affecting the reliability of electricity supply, the utility said.

The Rosseti subsidiary further stated:

“Dagestan continues to lead in the number of cases of illegal mining. This is due to attempts by individual citizens to profit without spending their own money.”

Since 2023, at least 147 such cases have been registered in the republic, and the three-year total of the damages they account for is 277 million rubles (nearly $3.5 million).

Russia keeps cracking down on underground crypto mining

The Russian Federation legalized cryptocurrency mining in the fall of 2024, to exploit its energy resources and climatic conditions, but just a few months later realized it’s having a problem with the energy-hungry industry.

Low electricity rates in parts of the country, along with the high profitability of mining, led to increased concentrations of crypto farms in certain areas, both legal and illegal, causing severe energy shortages in some cases.

Ahead of the weekend, Russia’s Operator of the Unified Energy System, which controls its vast power grid, announced that four regions – Tatarstan, Buryatia, Transbaikal, and Khabarovsk Krai – have registered record-high electricity consumption in the past few days.

Quoted by Gazeta.ru, the specialized body noted that an increase in industrial loads is one of the main factors driving growth in power usage in these territories. The Republic of Buryatia and Zabaykalsky Krai restricted mining in November, as reported by Cryptopolitan.

Backed by Moscow, authorities in about a dozen regions in total, from the Far East to Eastern Ukraine, have prohibited the activity this year, either temporarily, during the cold winter months, or permanently, until the spring of 2031.

Earlier in December, the Telegram channel Mash revealed that rogue crypto miners operating in the North Caucasus as a whole are responsible for over 1 billion rubles ($13 million) in damages to the local power utilities in 2025 alone.

In its latest report on the matter, TASS noted they are becoming more inventive and harder to catch, with mobile and underground farms, even underwater installations, now discovered regularly in the region.

The authorities are employing increasingly sophisticated methods to locate the coin minting facilities, too, tracking consumption through smart meters and traffic with the help of internet providers. Last month, they caught a fugitive crypto farm on wheels using a drone with night vision capabilities.

In an attempt to bring the whole sector out of the shadow economy and reduce its energy usage, the Russian government is now seriously considering whether to introduce criminal liability for illegal mining of cryptocurrencies and administrative penalties for smaller violations of the law.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program