Russia is now ranking second in terms of energy capacities engaged in the extraction of cryptocurrencies, new data suggests. Despite persisting regulatory uncertainty and the negative effects of sanctions, the amount of power devoted to the sector has been growing, reaching record highs this year.
1 GW of Electrical Power Involved in Crypto Mining in Russia During Q1 of 2023
Russia has for the first time climbed to second place in the world in terms of total power capacity of the facilities devoted to the production of digital currencies. According to data provided by the country’s largest mining operator, Bitriver, the amount of power involved in coin minting has reached 1 gigawatt (GW) in the first three months of the year.
The United States remains the clear leader with 3 to 4 GW of mining capacity, the Russian business daily Kommersant reported. The top 10 also includes Gulf countries (700 MW), Canada (400 MW), Malaysia (300 MW), Argentina (135 MW), Iceland (120 MW), Paraguay (100–125 MW), Kazakhstan (100 MW), and Ireland (90 MW), the newspaper detailed.
Bitriver noted that the positive trend for Russia is linked to last year’s reduction of mining activities in Kazakhstan, where authorities have been shutting down authorized mining data centers and going after illegal crypto farms due to electricity shortages. The Central Asian nation’s growing power deficit has been blamed on the influx of miners following China’s crackdown on the industry. A law limiting their access to low-cost, subsidized electricity entered into force in February.
The U.S. also leads in terms of share of the global hashrate. However, the growth of the American market is being slowed down by rising electricity rates, reduced mining profitability, and the abolition of tax incentives in some areas, Bitriver CEO Igor Runets remarked and further commented:
In addition, the vast majority of equipment was purchased by American miners on credit, so many over-leveraged companies are in the process of bankruptcy or have already gone bankrupt.
The actions of U.S. regulators are also drawing the attention of market participants, added Roman Nekrasov, co-founder of Encry Foundation, which represents IT companies providing services in the field of blockchain and tech innovations. He believes they can provoke another major redistribution in the mining market.
Data provided by the head of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (Racib), Alexander Brazhnikov, suggests that the energy capacity of Russia’s crypto mining sector may be even higher. Quoted by the crypto news outlet Bits.media, he said that the Russians use about 800,000 ASIC miners, the combined power rating of which exceeds 2.5 GW.
According to research published in August, the electricity consumption of Russian miners increased 20 times over the course of five years, between 2017 and 2022. The development of the industry in the country is facilitated by the availability of cheap energy resources and cool climates in regions such as Irkutsk. However, its future remains unclear in the absence of regulations. A bill designed to introduce rules for mining businesses is yet to be passed by the parliament in Moscow.
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