Russia’s crypto mining is now the World’s Second-Largest Crypto miners. Crypto mining, as you know, involves using sophisticated equipment like GPUs (graphics processing units) and ASICs (application-specific integrated circuits), amongst others, to engage in the mining of cryptocurrencies such as Bitcoin and other PoW altcoins.
- Russia’s crypto mining capacity increased to 1 gigatonne in January-March 2023, making it the world’s second-largest crypto miner after the United States.
- The use of cryptocurrencies such as Bitcoin is still prohibited in Russia due to restrictive laws on cryptocurrencies.
Since China cracked down on the practice in 2021, the United States has been at the forefront of crypto mining and has seen an influx of cryptocurrency miners, who use powerful, energy-intensive computers to create and track virtual currencies.
Even though mining activities have been proven to have a negative impact on the environment, this has not stopped miners from engaging in crypto mining. The United States alone contains 3-4 gigatonnes of mining capacity, while Russia’s crypto mining generating capacity reached 1 gigatonne in January-March 2023.
Due to restrictive cryptocurrency laws, including President Vladimir Putin’s 2020 law on digital financial assets, the use of cryptocurrencies such as Bitcoin is still prohibited in Russia. Citizens may own them, but they cannot be used to buy goods or services.
The European Union prohibits all cryptocurrency transactions with Russian citizens and also imposed massive and unprecedented sanctions against Russia in response to the war of aggression against Ukraine, which started on February 24, 2022.
Nevertheless, the US has blacklisted a Bitcoin address and an Ether address as of February for allegedly being involved in Russian defense equipment sales abroad.
Russia’s Crypto Mining: Russians Crypto Reconsideration
Crypto is already a contentious topic in Russia, with many factions within the government debating whether to regulate or ban it. Since Russia’s invasion of Ukraine, the country has been subjected to crippling Western sanctions, preventing it from running its economy as efficiently as it could. As a result, the lower house of parliament is debating a bill that would legalize a crypto market within the country, including the legalization and sale of cryptocurrencies.
The Central Bank of Russia (BoR) is also reportedly planning to test the use of cryptocurrencies for international payments. Given Russia’s current political situation, both the BoR and the Finance Ministry believe that doing without cross-border crypto settlements is no longer an option.
Finally, It’s fascinating to see how Bitcoin and crypto mining has shifted around the world in response to geopolitical situations. Regulatory concerns have had an impact on various jurisdictions, but perhaps some governments have imposed bans or restrictions on Bitcoin mining because it was determined that it was consuming too much of the local energy supplies.
For example, the U.S Treasury Department has proposed a 30% excise tax on the cost of powering crypto mining facilities in the U.S.