Crypto mining will soon be banned in parts of Russia

Mining of digital assets can be increasingly burdensome for power grids

To preserve energy resources in parts of the country, Russia has announced that some locations will ban the process of crypto mining. Photo: Bloomberg

Beginning in 2025, crypto mining will be banned in several locations throughout Russia as a way to preserve energy resources, according to Russian state media.

“The restrictions will be in force until March 15, 2031,” read the report from Tass, which said that the list of regions within the country where mining was banned would be adjusted as needed.

“The task of such restrictions is to maintain the balance of energy consumption, taking into account the demands of the industry."

An Etherium crypto mining rig displayed at the Thailand Crypto Expo 2022 in Bangkok. Bloomberg

Cryptocurrency mining is generally defined as the process by which digital assets are obtained, most famously initiated by Bitcoin. They are secured through a blockchain network.

The mining, however, is incredibly energy intensive, and can sometimes require special hardware.

Dedicated mining companies, with already highly efficient setups, consumed about 155,000kWh of electricity to mine a single Bitcoin, according to Crypto.com.

For perspective, the average energy consumed for one Bitcoin transaction is 851.77kWh, which is equivalent to about a month's worth of electric power consumption in the average US household.

Although data for Russia and crypto mining is not readily available, according to the International Energy Agency, mining for digital currencies takes up anywhere from 0.6 to 2.3 per cent in the US, with that number expected to grow in the years ahead.

While that number may seem small, it can be burdensome for energy providers, especially in areas vulnerable to energy crunches.

Yet with interest in cryptocurrencies showing no sign of waning, various technology and energy companies are looking to potentially plug the gap in energy demand.

Earlier in December, two UAE companies announced they would team up to build the country's biggest solar farm dedicated to crypto mining, as the country aims to promote sustainable solutions to the energy-intensive process.

Abu Dhabi will soon host the UAE's biggest solar farm dedicated to crypto mining worth $1 billion. Victor Besa / The National

During a presentation about artificial intelligence, data centres and energy consumption, Steven Chu, Barack Obama’s former energy secretary, briefly addressed the increasing burden placed on power grids from cryptocurrencies.

“Roughly speaking, half of the electricity of data centers is used to mine bitcoin type currencies,” he said, emphasising the need for increasingly smart power grids around the world. “Half of the electricity doing that is not a good thing."

Mr Chu also pointed to AI as potentially becoming burdensome for energy grids, although he pointed out that the technology could also prove to eventually be beneficial for energy companies and consumers. He also said that companies are finding ways to make the hardware for data centres to be more efficient in the long run.

"If you look at Nvidia's website, you can see they're bragging about how low in terms of energy per unit for operation, the H100 is, it's about a kilowatt of power for one chip, but they claim it's very low compared to what it does for one chip," he said.