BitRiver Bankruptcy Case Exposes Russia’s Bitcoin mining sector

Calvin James

The biggest Bitcoin mining facility in Russia, BitRiver, has found itself in an expanding legal and financial crisis that is currently throwing new light on underlying structural risks in the industrial crypto-mining sector of the country. The huge amounts of debt, purported tax violations, and the results of being in a market where no regulations have been firmly established have been revealed through bankruptcy monitoring against the company that controls BitRiver, Fox Group LLC, and criminal charges against its founder, Igor Runets.

Repeated requests by Infrastructure of Siberia, which is a subsidiary of the energy and metals group En+, petitioned the Sverdlovskiy Regional Arbitration Court to introduce an observation procedure against Fox Group. The announcement is an indication that the court believes there is an early warning of insolvency, and it has precipitated the formal management of the financial operations of the business. Court documents indicate that Infrastructure of Siberia is looking to claim creditor claims totaling approximately $9.2 million, consisting of principal debt, penalties due to the late delivery of equipment, and legal fees, all understood as third-priority claims.

The conflict can be attributed to a breakdown of equipment supply contracts. Siberian infrastructure had made over 700 million rubles in advance payment to Fox Group based on a contract to deliver mining-related hardware. The equipment was never upheld, and the contract was terminated and a lawsuit was filed to recover penalties. In April, a court ruled in favor of the energy subsidiary, the enforcement efforts were halted when Fox Group was unable to raise funds to meet the judgment, resulting in the filing of the bankruptcy.

Meanwhile, the internal processes in BitRiver have become worse. The former and current employees state that salaries have been outstanding for over three months, and the management has not given them an explanation of how these delays will be addressed or given a deadline. Multiple offices have also been closed down, and documents of the company, their accounting record,s and company seals moved off-site and to locations that are not known. Employees report an information vacuum where the top staff and owners are mostly unresponsive.

Tax evasion and increasing legal burden

This financial crisis was fuelled by the fact that a Moscow court put BitRiver founder Igor Runets on house arrest. Investigators are alleging that he is hiding money that ought to be used to pay taxes, and this has further weakened the confidence that the company is able to stabilize. The charges relate to greater tax audits of BitRiver and its customers, in which the mining infrastructure payments were reportedly masked as normal business expenses.

Legal experts who were aware of the case have indicated that tax officials started investigating BitRiver after they spotted that there were regular monthly payments made to the company by commercial companies that were allegedly paying to use the services of the company. The paying company, in at least one case, was audited by auditors was a traditional manufacturing company and there was no clear requirement in the company to have high-performance computing or data-processing services.

Researchers found that the payments were applicable in covering electricity usage and mining infrastructure instead of actual computer activity. Tax-wise, mining output should have been noted as revenue in such transactions, and the taxes were to be paid. Rather, the expenses were charged off, reducing the taxable base. In response to a query to explain what services they are offering, BitRiver is said to have given an ambiguous answer, which never made direct mention of mining or specialized equipment ,making the audit process difficult.

Specialists indicate that such constructions might have been common with large amounts of money being transferred through the infrastructure of BitRiver without due tax reporting. According to them, this trend was most likely the catalyst for an increased investigation by the Federal Tax Authority and eventually led to a criminal case against the management of the company.

Industry uncertainty and the path toward insolvency

The crisis of BitRiver has been occurring against the backdrop of the intensified regulation and local prohibitions of crypto mining in Russia. Despite the ambiguity of mining at the federal level, some of the regions have banned it (partially or completely) because of energy limitations. In Irkutsk, as a result of local bans, BitRiver sites in some areas were closed, and a 100MW data centre in Buryatia remained uninitiated. Already, authorities have declared a year-round mining ban in that area beginning in the year 2026.

Sites that have been functioning even after being restricted have also been targeted by law enforcement. In early 2025, a 40-megawatt installation based in Ingushetia associated with the BitRiver network was closed down by the officials, which was due to the fact that there was a ban on mining that was in force. Even alliances with large energy corporations have collapsed, such as the joint project based on Gazprom Neft, which was shut down due to the cancellation of contracts. Every shutdown had a negative effect on the operating capacity of BitRiver and increased financial pressure.

According to analysts, the pressure of regulation is not a complete explanation of the collapse of the company. The effect of the sanctions and tax collection was enhanced by corporate governance concerns, high dependence on upfront payments, and vulnerability to energy conflicts. The appearance of an observation procedure imposed by the court implies that Fox Group could not negotiate debt restructuring and bridge financing on time.

A temporary administrator supervises the critical transactions, prepares a list of creditor claims, and supervises the finances of the company under observation to eliminate asset stripping. Bankruptcy experts observe that the procedure usually hastens when other creditors, such as suppliers of energy and tax collection governments, make competing claims. According to the case of BitRiver, the power bill owes reportedly hundreds of millions of rubles to energy companies, and some of the accounts have been frozen.

Matters have been worsened by the incarceration of Runets. Legal experts claim that founders have the center stage in the negotiation with creditors and other prospective investors, particularly in closely held groups. Being under house arrest, Runets can hardly organize rescue operations, inject his own money, or react quickly to events. The very nature of the tax charges implies that there are outstanding commitments due to the state, which normally assumes priority in the case of insolvency.

Unless a strategic investor comes out to take on liabilities and finance settlements, legal analysts predict that the process of bankruptcy will spread to other BitRiver network members besides Fox Group. It is also said to have dozens of affiliated companies joined together by common infrastructure and funding structures, which increases the potential of a domino-like default.

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