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James Carter

June 24, 2023

This Is Why Russia Is Becoming a ‘Crypto Mining Hotspot’

Experts have explained why Russia is apparently becoming a Crypto Mining Hotspot, even though the country says its cryptocurrency mining hash rate is only second to that of the United States.

Why Russia Is Becoming a Crypto Mining Hotspot ?

Nikita Zuborev, a Senior Analyst at the local cryptocurrency exchange BestChange, told Finam:

“Mining cryptocurrency in Russia has a lot of good points. These include energy prices that aren’t too high. Even in Central Russia, costs are about the same as they are everywhere else in the world. But the benefits are much higher if we talk about places with even lower rates, like Irkutsk, Krasnoyarsk, Khakassia, and Dagestan.

Zuborev also said that some parts of the country had too much energy and could give it to mines on “favorable terms.”

The expert also said that “relatively” low taxes on company income were a plus for many mining companies.

Zuborev also said that Russia’s closeness to China, the “absolute leader” in making crypto-mining tools, was a “minor but still noticeable” plus.

Zuborev stressed that “direct rail links” between the two countries mean that mining equipment can be sent faster and for less money.

Is Russia really the second-biggest place to mine cryptocurrency in the world?

The most recent Bitcoin energy usage index from the Cambridge Centre for Alternative Finance (January 2022) said that Russia’s average monthly hash rate would be less than 5% of the world’s total.

The United States, on the other hand, got almost 38%, while Russia’s neighbors Kazakhstan and China each got over 13% and 21%.

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The global Bitcoin energy consumption index from the University of Cambridge was last updated in January 2022. The darker the color, the more it has been used. (Cambridge Centre for Alternative Finance)

But Komersant says that the Russian mining giant BitRiver thinks that the country actually has about 1GW worth of crypto mining power.

It said that the U.S. has about 3–4 G.W. of mining power but that regulatory changes in Kazakhstan last year (caused by major energy shortages in late 2021) and a crackdown on mining in China in 2021 have helped Russia surpass its neighbors in Bitcoin and altcoin hashrates.

BitRiver said that no other country has more than 0.5GW of power.

The mining company said that the Gulf States as a whole have 700MW and Canada has 400MW.

The coin mining company also said that the U.S.’s place at the top of the mining tree could be in danger.

American mining business

Igor Runets, the CEO of BitRiver, said that the American mining business is “slowing down” because U.S. electricity prices are going up, mining profits are going down, and tax breaks have been taken away.

Runets said:

“Most of the equipment [used in the U.S.] was bought on credit by American miners. That means that so many companies with too much debt are now going bankrupt or have already gone bankrupt.

The COO of Green Crypto Processing, Ivona Gutovich, told Fianam:

“Russia is one of the biggest places in the world that makes electricity. And this country has some of the lowest power prices in the world.”

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She also:

“The cold weather also saves miners money on the cost of cooling their mining farms. In general, Russia has everything it needs to become a place where cryptocurrency miners want to work.

And the founder of Cryptonomos, Evgeny May, said this about the future of the business in Russia:

“I think there will be enough people in Russia who will continue to invest in [cryptocurrency mining] as long as we have clear rules and regulations in the field.”

This week, the country’s energy ministry said that Moscow needs to move faster to get cryptocurrency mining legalized.

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Also this week, the Russian secret services arrested a Russian citizen in the country’s Far East on charges of treason. The person was accused of sending encrypted information to Ukraine’s military.

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