coindesk.com
Igor Runets, who founded Russia’s largest crypto mining firm BitRiver, is under house arrest on tax evasion charges, Bloomberg reported on Monday. Runets was detained on Friday and is facing three charges for allegedly concealing assets to evade taxes.
Runets’ legal team now has a small window to appeal the house arrest before it becomes fully enforceable on Wednesday. If an appeal is unsuccessful or not filed, Runets will remain home‑bound for the entirety of the case, according to RBC.
Runets, 39, is a top pioneer among Russia’s crypto mining industry, Bloomberg reported on 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 U.S. sanctioned the BitRiver in 2022 following Russia’s invasion of Ukraine. For comparison, MARA Holdings, one of the biggest U.S. 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 drew clients worldwide, including the U.S. and China. And as bitcoin peaked in price, surging almost 650% to more than $62,000 by October 2021, according to CoinDesk data, mining for the cryptocurrency became increasingly profitable at the time.
Also, on Monday, local news agency Kommersant reported that BitRiver is facing potential bankruptcy after an En+ Group subsidiary filed an insolvency claim in a regional arbitration court. The dispute centers on allegations that BitRiver’s parent, Fox Group, failed to deliver prepaid mining equipment, with the claimant seeking more than $9.2 million. Court-ordered account freezes tied to the case could disrupt operations at a company that once controlled more than half of Russia’s industrial crypto-mining capacity.
The legal challenge comes as BitRiver is already under strain from rising energy debts, equipment disputes and internal turmoil, Kommersant added, citing sources familiar with the situation.
Several data centers have reportedly already been shut down amid regional mining bans, while a large share of senior management has departed 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 electricity demand from the industry.
Miners facing financial trouble has been an widespread phenomenon after the recent halving event, which cut rewards in half, squeezing profit margins. With rising power costs and falling bitcoin prices, most miners have pivoted to offer their data centers to host computing machines for AI and cloud computing firms, diversifying their businesses away from mining.