Russia Turns to Soviet-Era Power Plant To Fuel Crypto Mining Boom
Key Takeaways
- Russia plans to reconstruct a USSR-era thermal power plant to manage load from crypto mining operations.
- Russia legalized mining operations in August this year but, within months, started to face electricity shortages.
- Iran also legalized crypto mining in the past but had to shut it down due to electricity shortage.
Buryatia, a region in eastern Siberia, is struggling to meet a surge in electricity demand driven by a growing number of legal and illegal Bitcoin miners.
To address the issue, local authorities plan to build a thermal power plant to stabilize the power grid and support the region’s booming crypto-mining industry .
Russia To Resurrect USSR-Era Thermal Plant
Russia’s Buryatia region is reviving a long-stalled thermal power plant project. The project aims to address the region’s electricity shortage, which is driven by the growing demand for crypto minin g. The TPP2 plant, with a capacity of 440 MW, is expected to be completed by 2029.
Originally launched in 1980, the project was halted in 1991 following the collapse of the USSR.
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Now, the government is reviving the project to tackle the region’s unstable electricity supply, which has been a concern since July. The reconstructed plant, to be built in Ulan-Ude, the capital of Buryatia, will add 300 MW of electricity to the grid.
Territorial Generating Company No. 14 (TGK-14) will invest approximately 40 billion rubles ($415,000) to update the plant.
According to Yevgeny Lukovnikov , Deputy Chairman of the Government of Buryatia, the project will implement the events of the Ulan-Ude master plan, adding two more power units to the Gusinoozerskaya GRES and providing an additional reserve.
“The project to reconstruct TPP-2 will allow us to implement the events of the Ulan-Ude master plan,” Lukovnikov shared. “We expect two more power units to appear at the Gusinoozerskaya GRES – an additional reserve will appear.”
Russia hopes to eliminate its electricity deficit with the reconstructed thermal power plant.
However, despite claims of eradicating illegal mining operations, the region still struggles to meet consumer demand. With only two legal Bitcoin mining operations currently operating in the region, the government faces an uphill battle against rampant illegal operations that continue to strain the main grid.
Is Mining Legalization Driving an Electricity Crisis?
As countries around the world legalize Bitcoin and crypto mining operations, they are often blindsided by the massive power consumption of these machines . Meanwhile, illegal mining operations are frequently excluded from electricity consumption estimates, leading to devastating consequences.
Many countries are learning the hard way that crypto mining can quickly lead to electricity deficits . Iran, for instance, legalized crypto mining in 2019, seeking to capitalize on the country’s low-cost electricity to mine Bitcoin. However, the move backfired when illegal mining operations sparked power outages within a year.
Despite repeated attempts to pause mining operations during peak electricity demand, the government was ultimately forced to ban mining altogether. Today, Iran is offering bounties to anyone who can provide information on illegal mining operations.
Russia, too, is facing similar challenges, as its own attempt to legalize crypto mining has been marred by electricity shortages and uncontrolled illegal operations. As the global crypto mining landscape continues to evolve, it remains to be seen whether nations will learn from these examples and develop more sustainable solutions.
Can Russia Become a Crypto Mining Capital With TPP2?
Russia’s legalization of Bitcoin mining and crypto use for international trade settlements in 2024 paved the way for industrial-level mining operations to flourish.
However, the rapid growth of both legal and illegal mining operations has led to a significant electricity deficit in several regions.
The surge in illegal mining operations has caught the attention of Russia’s Ministry of Energy, which has suggested shutting down such operations to ensure a stable electricity supply. Despite this, country officials and the energy department remain optimistic that the reconstruction of a USSR-era power plant, TPP2, could boost electricity production and help alleviate the deficit.
Once completed, the power plant could position Russia as a mining hub with cheap electricity and a legal framework. However, the construction process is expected to take at least four years, during which time the government must carefully manage its electricity load to avoid a situation similar to Iran’s, where the country was forced to ban mining operations due to severe electricity shortages.
In the meantime, it’s likely the Russian government could crack down on illegal mining operations to ensure the country’s electricity deficit is well managed.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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