Igor Runets, who founded BitRiver, Russia’s largest cryptocurrency mining company, is under house arrest on charges of tax evasion, Bloomberg reported on Monday. Lunetz was taken into custody on Friday and faces three charges of concealing assets for tax evasion.
Runets’ legal team now has a small window in which he can appeal his house arrest before it goes into full effect on Wednesday. According to RBC, if the appeal is unsuccessful or not filed, Lunetz will be confined to her home for the duration of the case.
Lunets, 39, is a top pioneer in Russia’s cryptocurrency mining industry, Bloomberg reported on Monday. He founded BitRiver in 2017 and has since expanded to 15 data centers with over 175,000 servers and 533 megawatts of capacity. The United States imposed sanctions on BitRiver in 2022 following Russia’s invasion of Ukraine. For comparison, MARA Holdings, one of the largest Bitcoin miners in the US, has a mining capacity of 1.8 gigawatts.
The Stanford University MBA graduate began building a cryptocurrency mining data center in Siberia in 2017. Soon after, BitRiver gained customers around the world, including the United States and China. And mining the cryptocurrency was becoming increasingly profitable at the time, when the price of Bitcoin peaked, rising nearly 650% to more than $62,000 by October 2021, according to CoinDesk data.
Also, on Monday, ILocal news agency Kommersant reported that BitRiver is facing possible bankruptcy after a subsidiary of En+ Group filed for bankruptcy with the local arbitration court. The dispute centers on allegations that BitRiver’s parent company, Fox Group, failed to deliver prepaid mining equipment, and the plaintiffs are seeking more than $9.2 million. Court-ordered account freezes related to the case could disrupt operations at a company that once controlled more than half of Russia’s industrial cryptocurrency mining capacity.
Kommersant added that the legal challenge comes at a time when BitRiver is already under strain from rising energy debts, equipment disputes and internal turmoil, citing sources familiar with the situation.
Several data centers have reportedly already closed due to local mining bans, while the majority of senior executives have left over the past year. Analysts told the newspaper that BitRiver’s collapse is likely to accelerate consolidation in Russia’s mining sector and reshape expectations about the industry’s electricity needs.
The phenomenon of miners facing financial hardship is widespread after the recent halving event, which cut rewards in half and squeezed profit margins. With rising power costs and falling Bitcoin prices, most miners are diversifying their business away from mining by pivoting their data centers to hosting computing machines for AI and cloud computing companies.
