Region Seeks to Balance Energy Needs with Environmental Concerns

According to a report by the Interfax news agency, the governor of Russia’s Irkutsk province has put forward a solution to tackle the issues caused by bitcoin mining in the region: using associated gas produced during oil extraction. This initiative comes amid recent mining bans both in the region itself and in other parts of Russia. Experts note that this solution could potentially not only reduce the strain on power grids but also improve the environmental situation by cutting down on the practice of gas flaring.

Mining Bans: Response to an Energy Crisis

In early April 2025, the Irkutsk region implemented the first permanent ban on mining in the southern part of the oblast. This decision follows a winter ban imposed by Moscow just months earlier, prohibiting mining in 10 Russian regions until 2031.

These measures were taken in response to growing pressure on the energy infrastructure. The Irkutsk region, known for its relatively low electricity prices thanks to numerous hydroelectric power plants, became a magnet for bitcoin miners after China banned the activity in 2021. As a result, the region faced serious problems of power grid overload, especially during the winter period when electricity consumption reaches peak values.

“The region’s energy system simply wasn’t designed for such a sharp increase in consumption,” explains Anton Sizov, an energy sector analyst at RBC. “In some areas, miners increased the load on local networks by 20-30%, leading to frequent power outages in residential buildings and businesses.”

However, the prohibitive measures have drawn criticism from representatives of the mining industry, who point out that such restrictions may lead to an increase in illegal operations and the loss of potential tax revenues for the region.

Associated Gas: An Alternative for Bitcoin Miners

Governor Igor Kobzev called on major mining operators to partner with oil and gas companies with the aim of building data centers powered by “alternative fuel sources.”

During a regional address on April 25, Kobzev made it clear that the Irkutsk government is “not opposed to mining as a phenomenon.” However, he stressed the need to overcome power shortages, underlining the government’s responsibility to ensure uninterrupted electricity supply for local residents and businesses.

“The regional government is ready to act as a platform to coordinate interaction between mining operators and enterprises working in the oil and gas production sector,” Kobzev stated. “There are already successful cases of firms building data centers powered by autonomous generation. These firms use associated gas.”

Russian oil companies have already begun collaborating with miners on pilot projects involving associated gas. Some of the country’s largest mining firms and oil producers—including BitRiver and Gazprom Neft—launched joint initiatives in 2022.

Kobzev appears determined to keep miners in southern Irkutsk off public grids, promising to support associated gas-powered mining projects “in every possible way.”

He also emphasized that such partnerships could help improve Irkutsk’s environment by reducing flaring—the practice of burning excess gas.

A Win-Win Solution?

During crude oil extraction, producers often release pockets of natural gas (known as associated gas). If they lack the infrastructure to capture it, this gas is typically burned off using flare stacks, resulting in significant emissions of carbon dioxide and other pollutants into the atmosphere.

Many industries are reluctant to use associated gas since it tends to generate intense but irregular bursts of energy, rather than stable continuous flows, making it impractical for most industrial applications.

Some Russian miners, however, claim they’re willing to work with this type of energy supply—provided they can access it at discounted rates.

“Cryptocurrency mining is one of the few applications where irregularity of energy supply is not a critical disadvantage,” explains Maria Kulikova, a blockchain technology expert from the Russian Association of Cryptoeconomics and Blockchain (RACIB). “Mining farms can quickly adapt to fluctuations in energy supply, reducing or increasing computational power according to energy availability.”

Kobzev expressed optimism but warned that failing to resolve the mining-related energy issues could push the capacity deficit in southeastern Siberia to nearly 3 GW by 2030.

Critics argue that efforts to ban mining in southern Irkutsk have instead driven up illegal operations in the region. Nevertheless, the use of associated gas offers a potential solution that could satisfy the interests of both miners and regulators.

Global Context and Perspectives

The use of associated gas for bitcoin mining is not just a Russian initiative. Similar projects are being implemented in various oil-producing regions around the world, including Texas and North Dakota in the United States, as well as some regions in the Middle East.

“This solution represents an example of how the cryptocurrency industry can adapt to environmental and energy challenges,” comments Alexander Brazhnikov, Executive Director of RACIB. “Using energy that would otherwise be simply burned not only reduces the carbon footprint of mining but also creates economic incentives for oil companies to invest in infrastructure for capturing associated gas.”

However, the implementation of such projects faces a number of technical and logistical challenges. Oil fields are often located in remote areas, creating difficulties for the construction and maintenance of mining data centers. In addition, significant investments are required in equipment to convert associated gas into electricity.

Despite these difficulties, the initiative of the Irkutsk region’s governor could become a model for other regions facing similar problems. If successful, this approach could offer a viable solution for balancing energy needs, economic development, and environmental considerations.

“We are closely watching the development of this situation,” says Dmitry Marinichev, Russia’s Internet Ombudsman. “If the Irkutsk region can successfully implement this model, it could become an example not only for other Russian regions but also for countries with similar energy and environmental problems.”

As debates about the environmental impact of cryptocurrency mining continue worldwide, innovative approaches like the use of associated gas offer a potential way forward that could satisfy both supporters and critics of this technology.