Executive Summary:
- Russia is experiencing energy shortages and electricity generation problems exacerbated by its war against Ukraine, sanctions, and cryptocurrency mining.
- Russia’s electricity exports to the People’s Republic of China (PRC) significantly dropped in 2024 due to energy deficits in the Far East, and these regions are now considering importing electricity from the PRC to combat these shortages.
- The increased energy usage due to cryptocurrency mining has led to regional mining bans and new tariffs. Moscow views cryptocurrency as a tool to bypass sanctions, making it reluctant to establish a total ban.
Russia's war against Ukraine, the booming demand for cryptocurrency mining, and Western sanctions have pushed Russia to the brink of an energy crisis. How the Kremlin may shift from being an energy exporter to an energy importer is explored by Dr. John C.K. Daly for The Jamestown Foundation.
Eastern Russia is already suffering the most from the internal energy deficit. Once a powerful energy supplier to China, Russia's export to China dropped nearly threefold last year.
Additionally, cryptocurrency miners are causing serious problems. Russian officials were forced to announce that in certain regions, including the Far East, southwest Siberia, and southern Russia, "miners have exhausted all available energy capacity," and new consumers will not be able to connect to the grid until at least 2030.
On top of this, by mid-2024, Russia started facing issues with electricity generation itself. Outdated Soviet-era power plants can no longer meet modern demands. The authorities are attempting to resolve the crisis through tariffs and certain restrictions, but problems are continuing to accumulate. Currently, there are even plans to import energy from China.
"While the Russian government remains largely in denial about the negative impact of Western sanctions, Siberia’s increasing energy difficulties in forcing the region to seek PRC assistance represents not only a blow to Russian electrical imports as recently as a year ago but another factor representing the PRC’s rise amid Russia’s decline. A century ago, electricity generation was crucial to the establishment of Bolshevik power. On December 22, 1920, at the VIII All-Russian Congress of Soviets, Lenin told his comrades, “Communism is Soviet power plus the electrification of the entire country” December 26, 2023). Whether Russia’s new energy strategy can address these century-old problems remains to be seen," read the statement.
