How to mine bitcoin and not be in trouble with the law

Rising prices on the cryptocurrency market provokes illegal miners to increase their capacities and look for new ways to use other people’s electricity

The rapid growth of the crypto market after its November lows is affecting the expansion of all areas of the cryptocurrency industry, including its fundamental mining process. Leading mining companies are increasing their equipment capacity. But rising profits inevitably attract those who want to make money from bitcoin mining UAE, taking advantage of loopholes in the law or relying on other people’s resources.

“Household” mining

Activation of “gray” miners often coincides with changes in market conditions. In January 2023 the income of bitcoin miners increased by 50% due to the rise in price of the cryptocurrency to $24K. Miners began to increase capacity, that is, to connect new equipment, and its cost has already increased on average by 15-20% compared to the end of 2022. Unsurprisingly, illegal miners are also plugging in new capacity to increase income.

The very notion of “illegal mining” does not exist as such now, because mining itself has not yet been introduced into the legal field, not regulated in the law. There are individuals engaged in mining, who do not pay for electricity at all.

In essence, it is theft of electricity, for which, depending on the damage caused and other criteria, administrative, civil or criminal liability is established.

When there is a large systematic consumption of electricity for mining solely for profit, and it is paid at the rates for the population (that is significantly lower than the rates for businesses), the so-called cross-subsidization in the power industry increases. According to the BitRiver representative, this has a negative impact on the power system and industry – businesses incur additional costs in the form of fees for this volume.

In addition, initially the municipal and household electrical networks are not designed for a heavy load around the clock, due to which small “domestic” undeclared mining provokes emergencies, which power engineers are forced to eliminate. Resources for the development of networks for residential mining are not included in the tariffs, which leads to losses of power grid companies.

When mining farms of any format are placed illegally, the risks associated with fire safety increase significantly. Unsuitable facilities for mining, whether residential buildings or any commercial areas, usually do not have reinforced power lines capable of withstanding significant loads, and often do not have modern fire extinguishing systems installed.

Laws and tariffs

U.S. Governor Kathy Hocul of New York State has signed a law imposing statewide restrictions on cryptocurrency mining using electricity generated from non-environmental sources, the Associated Press reported.

The law is the first of its kind in the United States. The innovation comes amid growing public scrutiny of the cryptocurrency system following the collapse of the FTX cryptocurrency exchange.

The law establishes a two-year moratorium on issuing new and renewing existing mining permits for the use of electricity generated from non-renewable sources.

In addition, the New York City Department of Environmental Conservation will have to assess the environmental impact of mining.

Cryptocurrency mining requires computers that consume large amounts of electricity.

According to the U.S. Department of Energy as of November 2018, the annual electricity consumption for bitcoin mining is comparable to that of Hong Kong in 2019.

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