Power engineers want to turn off the light to the “gray” miners
The Association of Guaranteeing Suppliers and Energy Sales Companies (SOEs and ESCs) has proposed allowing power engineers to disconnect illegal cryptocurrency miners from power. Such a letter was sent on February 2 to the State Duma Committee on Energy and was later published on the organization’s website.
In the document, the head of the association Natalia Nevmerzhitskaya insists on enshrining in the regulatory framework the concept of “household electricity consumption”, clearly stating that it can not be carried out for profit. Appropriate amendments are proposed to the Housing Code or the Civil Code.
The mechanism of legal disconnection of illegal miners from electricity is proposed to be implemented through a technical connection agreement to the networks. According to Nevmerzhitskaya, the purpose of using electricity (for example, household electricity) must be fixed in it. In case of “deviation from the stated purpose” it should be possible to disconnect the consumer. And the Code of Administrative Offenses (Administrative Code) should provide for liability for the misuse of electricity, as well as for repeated failure to provide access to power engineers to inspect the electrical installation, according to the association.
“Illegal mining, in the case of establishing a farm in a residential building (or other facilities of citizens – in garages, gardens), affects the quality and reliability of electricity supply to consumers, as the household network is not designed for heavy loads associated with ultra-high energy consumption,” – explains Nevmerzhitskaya.
She also points out that the proposals will avoid the illegal use of electricity supplied to the population at subsidized rates, not only for mining, but also for other commercial purposes (for sawmills, sewing workshops, etc.). The letter also proposes to oblige Internet providers to provide IP addresses of miners to power grid companies and guaranteeing suppliers (the main energy sales of the regions, which are obliged to supply the population).
Cryptocurrency mining is not banned in Russia, but there is no legal framework regulating this type of activity yet (the Central Bank is in favor of a total ban on such activities in the country). At the same time, the demand for mining capacity is growing. According to the Russian Association of Crypto Industry and Blockchain (RAKIB), at the beginning of 2022, miners in Russia used about 1.2 GW of capacity. The absolute consumption record set in December 2021 is 161.4 GW.
According to the forecasts of RAKIB Executive Director Alexander Brazhnikov, by the end of the year the demand will grow to 2.5 GW. Igor Runets, CEO of BitRiver (the largest operator of data centers for mining), told Vedomosti that the number of connected devices at the company’s enterprises in 2021 was about 60,000 units and by the end of 2021 will exceed 200,000. The company’s data centers in Russia will increase capacity from the current 250 MW to 600 MW.
But in this case we are talking about industrial mining, says Brazhnikov. “Judging the commercial use of electricity by citizens, including mining, can be based on household consumption much higher than average (for example, more than 1,500 kWh per month in the absence of electric heating),” writes Nevmerzhitskaya. According to Brazhnikov, the total share of “gray” miners does not exceed 15-20% of energy consumption for these purposes. Not everyone can afford such a business, he explains: a 1 MW mining container (270-300 mining machines) costs 100-300 million rubles. depending on the performance of the equipment.
How many to hang in kilowatts
The problem of increasing electricity consumption by miners in Russia and their impact on electricity has been discussed at various levels since the fall of 2021. After the Chinese authorities banned cryptocurrency mining in the summer of 2021 amid energy shortages, entrepreneurs began to transfer computing power to other countries. including to Russia.
In September, Irkutsk Oblast Governor Igor Kobzev complained to the government and President Vladimir Putin about the problem of illegal mining farms. He wrote that in 2021 the population’s electricity consumption in the region will exceed the previous year’s level by 159% (Vedomosti reported on October 13). If in the last four years the population of the region consumed an average of 5.9 billion kWh per year, then only in the first half of 2021 – 4.7 billion kWh, said the head of the region. At the same time, the balances of electricity, taken into account by the scheme and program of development of the region for 2022-2026, provided for an increase in energy consumption in 2021 by only 2.8%.
Kobzev asked the government to introduce tariff differentiation on the principle of “the more you consume, the more expensive kWh”, following the example of the system already in place in the Crimea and Sevastopol. As the current situation, according to him, leads to significant loads on the grid “with risks of accidents and emergencies” and exacerbates the problem of cross-subsidization in the energy sector. A Vedomosti source close to the Ministry of Energy says that underground miners have also received complaints from the North Caucasus. And the representative of the association of SOEs and ESCs notes the surge in mining activity in 2021-2022. also in the Krasnoyarsk Territory.
In addition to the risk of electrical equipment failure due to low voltage overloads, power engineers suffer direct losses due to gray miners.
“The SOE is forced to buy more electricity on the market at unregulated (market -” Vedomosti “) prices to cover the unscheduled demand of the population,” explains a representative of the association of SOEs and ESCs. Market wholesale prices are higher than the cost of electricity purchased by SOEs under regulated contracts and included in household tariffs. According to him, the guaranteeing supplier will be able to compensate for these losses only after 2 years “in subsequent tariff periods”.
After heated discussions in the Cabinet of Ministers and the Parliament in December 2021, a resolution was passed giving the regions the right to set tariffs for individuals depending on the volume of consumption. However, so far no region, including the Irkutsk region, has announced the introduction of such tariffs. To do this, the FAS must develop a methodology. On February 1, 2022, the Antimonopoly Service announced that it was still under discussion with federal and regional authorities, the expert community, and consumers.
Earlier, the Council of Energy Producers (association of large generating companies) proposed to set a higher tariff for volumes “above reasonable for household consumption”, and in the Energy Consumers’ Association (lobby of large energy-intensive enterprises) called a specific bar for households: 7000-7500 kWh per month 20-25 times more than the average consumption of the population.
The representative of the Ministry of Energy did not evaluate the proposals of the Association of SOEs and ESCs, noting that the ministry “supports the legislative regulation of mining.” A similar position is held by the Market Council (regulator of energy markets). “Given that mining is an activity aimed at making a profit, the use of subsidized tariffs for the population in such cases is unreasonable. In addition, this may lead to an increase in the already extremely high level of cross-subsidization (lower tariffs are now offset by higher prices for industrial consumers. – “Vedomosti”), “- said his representative to” Vedomosti “.
A representative of the UES System Operator (Energy System Manager) said that the problem of illegal mining “is the responsibility of energy companies.”
Vedomosti also sent a request to Rosseti.
Yuri Melnikov, head of the hydrogen and energy efficiency department at the Skolkovo LSU Energy Center, notes that underground mining is unlikely to provoke problems at the power system level, but it certainly harms low-voltage power grids. According to him, the conditions for household mining in Russia are ideal: it is not so noticeable for energy companies (unlike more energy-intensive businesses such as bakeries), and the cost of electricity for the population since Soviet times has been subsidized by industrial consumers.
“It simply came to our notice then. Not only in the Irkutsk region, where historically the cheapest electricity for the population, but in all regions where the ratio of average wages and electricity prices makes it interesting to place a mining farm in an apartment: Khanty-Mansi Autonomous Okrug, Yamal, Moscow, Sakhalin, “he said.