In Russia , a problem of a national scale arose imperceptibly. According to the Kommersant newspaper, the other day, representatives of the domestic energy sector, among which companies involved in the sale of electricity stood out, appealed to the government and the president with a request to immediately begin regulating the market situation due to the critical growth in consumption associated with cryptocurrency mining.
According to industry representatives, after China in September-October, in the most literal sense, mercilessly turned off the switch in entire areas of cities with a population of over one million, virtual currency miners flocked to nearby countries. Most of them settled in neighboring Kazakhstan, which immediately collapsed the national energy system. The situation worsened so much that Nur-Sultan sent an official request to Moscow for the supply of any available amount of electricity.
Officially, this is not said, but, according to information circulating on the sidelines, Kazakhstan sank by 800 megawatts at once. Although it is still, as of 2018 ( the last officially published data ), our southern neighbor is fully ensured their own needs, producing and consuming 107 103 terawatt-hours of electricity per year, showing the generation of an increase of almost four percent in annual terms.
The situation could be attributed to infrastructural fatigue. It is known that a third of all generating facilities in Kazakhstan are over 30 years old, and the share of wear and tear on production equipment and distribution networks is 70 and 65 percent, respectively. According to the most conservative estimates, this leads to a loss of about fifteen percent of the total production.
All this is true and, undoubtedly, is a headache for the Kazakh government, but there is one but. The power system of Kazakhstan coped with the tasks assigned to it, moreover, the country even exported electricity abroad in the amount of five gigawatts. Today, the energy has suddenly ceased to suffice.
In Russia, before the aforementioned appeal of power engineers, the topic of mining (and especially massive illegal mining) was practically not raised. In our country, as in neighboring Kazakhstan, the mining of cryptocurrency is not legally regulated in any way. A complete legal vacuum encourages enterprising citizens to buy the right equipment and start mining.
In the vast majority of cases, this happens illegally – in the sense that farms located in the residential sector actually steal electricity, consuming it on an industrial scale, but paying at a preferential rate.
For understanding: a small farm with a cost of equipment of one million rubles (ten video cards in total) consumes almost one and a half thousand kilowatt-hours per month. That is, equipment that easily fits on one rack consumes as much energy as six or eight apartments where families with children, computers and other household appliances live. At the same time, of course, miners pay not five to seven rubles per kilowatt, like industrial enterprises, but a ruble and a half – in fact, they steal electricity, deceiving the state.
Here you need to understand that the state supports low tariffs for the population with the help of direct cash infusions.
To put it quite simply: large and medium-sized businesses transfer money in the form of taxes, due to which the difference in the cost of producing and selling electricity to the population is compensated. In 2018-2019, industrialists annually contributed more than 230 billion rubles to the treasury, and this year they are expected to pay ten billion more. That is, the state spends almost a quarter of a trillion (!) Rubles so that you and I can afford to live our usual life.
Illegal miners, whose farms can easily reach hundreds or even thousands of devices on ASIC chips or video cards, steal both electricity and taxpayers’ money in the most direct way.
Note that, in Russia, of course, there are companies that are engaged in mining completely legally, conduct their business transparently, pay for consumed electricity at the industrial tariff and taxes to the treasury. Their share in energy consumption is well known – it is about one gigawatt per year with a forecast of more than twofold growth in 2022. Again, for clarity: next year, legal miners will buy as much electricity as the Kursk NPP under construction with its two promising VVER-1300 reactors can produce .
The number of illegal crypto farms on the territory of Russia is unknown, and it is physically impossible to count them. According to the most conservative estimates, there are thousands, they are located in the most ordinary apartments, houses or garages, that is, they cannot be visually detected.
This is not a factory or even a sawmill. All these farms parasitize on the state budget, receiving electricity at household rates, twisting meters or illegally connecting to power lines.
It is difficult to estimate the damage caused by them, but the power supply companies, having calculated the losses and losses, call the figure – at least 400 megawatts. So much is produced, for example, by the Cherepetskaya hydroelectric power station in the city of Suvorov in the Tula region… It turns out that a conventional power plant the size of a Tula power plant has been idle for a whole year, because all its products are plundered in one form or another by enterprising citizens. In Soviet times, this was called theft of socialist property on an especially large scale and was mercilessly punished with impressive prison terms.
Our conversation would be incomplete without mentioning two more points.
The first is the canopy of silence that all kinds of environmentalists have shrouded in mining. All over the world, gigantic amounts of energy are spent on virtually nothing – heating the atmosphere. Bitcoin and its critical brothers cannot be touched, cannot be put into a wallet, and if tomorrow a man-made cataclysm suddenly occurs that disrupts the operation of networks, then the cryptocurrency will simply disappear, although, speaking in a purely physical sense, it never appeared. Tens, maybe hundreds of millions of video cards and ASIC chips devour hundreds of gigawatts of electricity, heating up like shaped irons, and an order of magnitude more energy is used to operate the cooling units.
Despite the fact that in the world, according to the UN940 million people have no access to electricity at all. Think about this figure: just under a billion people – that is, every seventh inhabitant of the planet – cannot turn on the kettle or get food from the refrigerator.
The second, but no less important point is that cryptocurrencies, in their essence, are an absolutely speculative instrument, a kind of financial bubble that has been inflated to an unimaginable size. For example, Professor Esvar Prasad, a leading expert on international trade at Cornell University, speaks about this in an interview with CNBC .
The specialist notes that bitcoin and its analogues are extremely volatile, that is, their value can fluctuate by tens of percent in a matter of hours, and it is extremely difficult to predict such jumps.
But most importantly – and this refers us to the point above – cryptocurrencies have nothing to do with the fight for the environment and decarbonization. It is estimated that more energy is spent on mining every year than a country like the Netherlands consumes . At the same time, 37 megatons of carbon dioxide is emitted into the atmosphere to support the operational activities of bitcoin alone at all stages – this is more than all New Zealand’s emissions combined.
New times and technological progress present many opportunities that make our daily life easier. But in this endless race, it is very important to call things by their proper names in order to avoid a dangerous substitution of concepts, when some are indiscriminately labeled as murderers of the future, while others, no less dangerous, forget to say at least a word for years.
As for Russia, the solution to the problem of mining, its transfer to a strictly legal and transparent channel, is obviously ripe. Our country, of course, has very large generation reserves, but the growth of black mining cannot continue indefinitely. Sooner or later, manufacturers will not be able to cover their losses from theft and lost profits, and all this in the form of increased tariffs will fall on the shoulders of ordinary citizens.