Illegal Russian Miners Charged With $1M Power Theft

Russian police have arrested two illegal cryptocurrency miners after a police raid on Thursday.

According to Russian media reports, more than 6,000 pieces of mining equipment were found at the site, an abandoned rubber factory in Orenburg, 1,478 kilometers southeast of Moscow near the Russian border with Kazakhstan.

Russian ministry of internal affairs spokesperson, Irina Volk, stated that the miners, two former factory employees, had stolen 8 million kW/h of electricity estimated to cost 60 million Russian rubles (RUB, approximately USD 968,000 at time of writing). Media reports suggest that despite rumors of the mining farm’s existence since March, police declined to comment if they had any knowledge of illegal activities taking place.

Earlier this year, Russian security officers arrested scientists at a top-secret warhead facility in Sarov, 240 miles east of Moscow. Several scientists had tried to use one of Russia’s most powerful supercomputers to mine Bitcoin. In mining, computers are used to solve mathematical problems to verify transactions and are rewarded in cryptocurrency.

The clandestine misappropriation of resources to mine cryptocurrency is a growing problem. Australian ABC News reported recently that the country’s bureau of meteorology was under investigation, with two of its IT employees suspected of using the bureau’s resources to mine cryptocurrencies, although no charges were laid.

Other examples are New York’s department of education and Louisiana’s Attorney General’s office allegedly misappropriating resources to mine cryptocurrencies. In December 2017, a former employee of the Federal Board of Directors was fined USD 5,000 after mining Bitcoin on a US Central Bank computer.

The Russian government is considering a new bill, currently circulating through Russia’s lower house, designed to amend tax codes to accommodate cryptocurrency miners. It labels mining as an “entrepreneurial activity”. Miners must register with the government, either as an individual entrepreneur or as a legal entity. Depending on how they register, miners could be subject to a 24% corporate tax rate if they register as a legal entity.

 

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