Igor Runets, who founded Russia’s largest crypto mining company BitRiver, is under house arrest on tax evasion charges, Bloomberg reported Monday. Runets was detained on Friday and faces three charges of allegedly hiding assets to evade taxes.
Runets’ legal team now has a small window to appeal the house arrest before it is carried out on Wednesday. If an appeal fails or is not filed, Runets will remain at home throughout the case, according to RBC.
Runets, 39, is a top pioneer among Russia’s crypto mining industry, Bloomberg reported Monday. He founded BitRiver in 2017 and later expanded it to 15 data centers with more than 175,000 servers and a capacity of 533 megawatts. The US sanctioned BitRiver in 2022 following Russia’s invasion of Ukraine. By comparison, MARA Holdings, one of the largest US bitcoin miners, has 1.8 gigawatts of mining capacity.
The Stanford University MBA graduate began building a crypto mining data center in Siberia in 2017. Soon after, BitRiver attracted customers around the world, including the United States and China. And when bitcoin peaked in price, rising nearly 650% to more than $62,000 in October 2021, according to CoinDesk data, mining for the cryptocurrency became increasingly profitable at that time.
Also on Monday d. lLocal news agency Kommersant reported that BitRiver is facing potential bankruptcy after a subsidiary of En+ Group filed an insolvency claim with a regional arbitration court. The dispute centers on allegations that BitRiver’s parent company, Fox Group, failed to deliver prepaid mining equipment, with the plaintiff seeking more than $9.2 million. Freezing accounts ordered by a court in connection with the case could disrupt the operations of a company that once controlled more than half of Russia’s industrial crypto-mining capacity.
The legal challenge comes as BitRiver is already under pressure from mounting energy debt, equipment disputes and internal turmoil, Kommersant added, citing sources familiar with the situation.
Several data centers have reportedly already been shut down due to regional mining bans, while much of the senior management has left over the past year. Analysts told the newspaper that a BitRiver collapse would likely accelerate consolidation in Russia’s mining sector and reshape expectations around industrial electricity demand.
Miners facing financial problems have been a widespread phenomenon following the recent halving event, which halved rewards and squeezed profit margins. With rising power costs and falling bitcoin prices, most miners have chosen to offer their data centers to host computers for AI and cloud computing companies, thus diversifying their businesses away from mining.
