Russia has emerged as the world’s second-largest country for Bitcoin mining during the first quarter of 2023, with a power use of 1 GW, according to a report from the Russian newspaper Kommersant. The United States leads the list with a power use of 3-4 GW. However, Russia’s rise is attributed to low power prices and its chilly climate, making it an ideal location for mining. However, the proposed law on Russia’s internal mining regulation has not yet been approved after the first reading in the State Duma. It poses risks for the country’s mining industry.
BitRiver Experts Link Russia’s Mining Industry Rise to Kazakhstan, China Restrictions
The rise in Russia’s mining industry is also attributed to the restrictions imposed on mining activities in Kazakhstan last year. Experts from BitRiver believe that the positive trend is linked to the fact that mining activities were restricted in Kazakhstan and China due to a lack of available energy. Kazakhstan implemented licensing for this type of operation at the end of 2022. It makes provisions for steps to safeguard the national energy system from unregulated mining.
Despite Russia’s rise to the second position, experts caution that the country does not yet have a legal framework in place for miners. In addition, the potential for sanctions to be imposed on Russian players and their counterparties located outside of Russia is growing due to increased sanctions against Russian enterprises. These sanctions were imposed by the West and secondary measures on financial institutions. It also includes exchanges, mining pools, and other international players that collaborate with Russian miners.
CEO of BitRiver Highlights Factors Slowing U.S. Bitcoin Mining Market Growth
Igor Runets, CEO of BitRiver, also pointed out that the rise in the price of electricity, the decrease in the yield of mining, and the elimination of tax benefits are factors that are slowing the growth of the market in the United States. He added that the overwhelming bulk of equipment was purchased by U.S. miners on credit, leading many to file for bankruptcy.
As the lack of clarity regarding how cryptocurrencies will be regulated in the United States continues, experts suggest that it could lead to a new redistribution of market share. However, the risks posed by foreign policy to the Russian mining industry are also increasing. It remains to be seen how the industry will evolve in the coming months.