Russian law enforcement is investigating the alleged theft of mining hardware worth about $1.9 million. Powerful computing equipment has disappeared from a crypto-mining hotel in Irkutsk, whose owners have been accused of massive fraud.

100 Russians lose 100 million rubles worth of miners

Russia’s Irkutsk state police have launched an investigation into the operator of a mining hosting facility that allegedly defrauded customers and stole its expensive minting hardware, TASS news agency reported, citing the head of the region’s interior ministry.

In order to make a quick profit, the miners handed over their equipment to those who ran the mining hotel, law enforcement officials explained. At some point, the latter stopped all payments to customers and did not return expensive machines.

“Criminal proceedings were instituted on the basis of these facts under Article 159 Part 4 of the Criminal Code of the Russian Federation (mass fraud). Various physical evidence, including computer equipment and documents, were confiscated from their offices,” a statement detailed.

Investigators have been able to determine that between November 2021 and May 2022, the suspect lured people who wanted to install minting hardware at the mining hotel. The rent and electricity they receive are well below the actual market price.

At the same time, miners are urged to hand over their equipment as soon as possible, citing limited rental space. The owners of the miners are not told where their equipment will be placed, and only representatives of the escrow service have access to the mined coins.

Russian police are now looking for fraudsters. About 100 people suffered losses for their actions. They gave the organizers of the mining hotel equipment an estimated total value of 100 million rubles, or nearly $1.9 million.

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The Irkutsk region offers some of the lowest electricity prices in the country, starting at just $0.01 per kilowatt-hour in rural areas, where crypto mining is booming, and farms are often installed in basements and garages and powered by subsidized electricity.

Largely for this reason, the state is known as the mining capital of Russia. Earlier this year, local electricity providers complained about a surge in electricity consumption in residential areas, which was blamed on home mining.

Russian media that planes of Chinese used mining equipment that hit the industry in May 2021 continued to arrive in the region this year, while cases of mining hardware theft have been on the rise. Russia is planning to legalize crypto mining, which could benefit from its abundant energy resources and cool climate.

tags in this story

coin minting, crypto, crypto miner, crypto mining, cryptocurrency, fraud, Irkutsk, miner, mining, mining equipment, mining hosting, mining hotel, mining machine, mining equipment, russia, russian, theft

Do you expect more fraud cases related to cryptocurrency mining in Russia in the future? Share your thoughts on the topic in the comments section below.

Lubomir Tasev

Lubomir Tassev, a journalist from tech-savvy Eastern Europe, likes Hitchens’ famous quote: “Being a writer is who I am, not what I do.” Beyond crypto, blockchain and fintech, international politics and The economy is two other sources of inspiration.

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