According to state-run media, 19 employees of Dagenergo, a company supplying electric and thermal power to Daghestan, have been detained in the republic on suspicion of embezzlement. 

The state-run news agency TASS reported on Thursday that investigative measures were being carried out against the 19 employees, citing a source in Dagenergo. 

Dagenergo is a branch of Rosseti North Caucasus, the main energy supplier in the North Caucasus. 

RIA Novosti, another state-run agency reported, quoting a source at Dagenergo, that those detained were mostly the people in charge of reading the meters.

‘Checks are also underway against a number of consumers who are suspected of commercially bribing these employees,’ the anonymous source said. 

Dagenergo’s press service told TASS that ‘the company's management is carrying out systematic work to suppress illegal actions in the electricity sector.’

OC Media has confirmed that the authorities originally detained seven employees on Thursday. The other 12 employees were detained a few hours later.

‘All suspects acted according to a simple plan: for a fee, the meter readers “altered” information about the electricity consumed, and payment for consumers, among whom were the owners of mining farms, became symbolic. All this led to losses for the company and underpayments to the budget’, an employee at Dagenergo, who asked to remain anonymous, told OC Media. 

Neither the republic’s Investigative Committee nor the Ministry of Internal Affairs have released any information about the detentions. 

A growing crisis

The investigation into embezzlement at Dagenergo was originally opened in April. That month, 36 people were charged, 31 of whom,  including the company’s director Magomedhabib Mukhumayev, were arrested and remain in pre-trial detention. 

All are accused of fraud causing especially large damage to the state budget in the amount of ₽2.8 billion ($27 million).

According to the investigation, Mukhumayev, together with the heads of a number of other companies, operated as an organised criminal group to steal money belonging to their parent energy companies MRSK North Caucasus and Rosseti. 

According to Irina Volk, the official representative of the Russian Interior Ministry, Dagenergo subscribers were supposed to have smart meters installed, which would transmit information about the consumed resource remotely and would effectively exclude any interference from meter readers. Mukhumayev, along with others, were allocated money from the federal budget in order to implement this automated electricity metering system in Daghestan. 

Daghestan ranks first in the North Caucasus — and most likely in all of Russia — in the number of detected thefts of electricity for the purposes of bitcoin mining. Mining cryptocurrency in Dagestan is profitable because the price of electricity in Daghestan is only ₽3.2-₽4.3 ($0.03-$0.04)/kWh.

According to Rosseti, in 2023, 19 illegal farms were found and closed in Daghestan — their owners did not pay for electricity at all. In 2024, raids became more frequent; 18 farms were closed down in the first quarter of 2024 alone.

Since then, Dagenergo and law enforcement agencies have regularly reported new farms found. The latest such report was released on Wednesday, stating that  two more underground mining farms were discovered in Daghestan.

In January, Dagenergo circulated an appeal asking owners of mining farms to switch off their equipment, as power grids could not withstand the load. Due to overloads, Dagenergo began to switch off its electricity supply. Consumers, tired of tolerating the lack of electricity in their homes, occasionally held protests, blocking the roads of Daghestan’s capital city, Makhachkala.

In November, the head of Daghestan, Sergei Melikov, asked the federal government to ban cryptocurrency mining in the republic ‘until the situation in the power grid complex stabilises’. According to Melikov, as quoted by TASS, electricity consumption in Daghestan has increased by 8% over the past year and by 26% over the last three years