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Russia’s market for specialized crypto mining equipment has seen strong demand in the past couple of months, with buyers attracted by the low price tags. Russian experts also predict an increase in the supply of used coinage hardware as large foreign companies exit the industry.
Demand for powerful computing devices designed to mint bitcoin surged in Russia during the fourth quarter of the year, spurred by their low prices amid falling crypto markets, Russian business newspaper Kommersant reported. The country’s cheap electricity prices and expectations of a higher supply of used miners have also played a role.
The positive trend in the market for ASIC (application specific integrated circuits) miners, used to mine bitcoin, has been observed despite a recent decline in demand for graphics processing units (GPUs), or video cards used to validate transactions for other cryptocurrencies, says experts from the industry to the newspaper.
Sales to mining retailer Chilkoot in the first two months of the 4th quarter exceeded sales for the entire third quarter. And the total for the previous nine months of 2022 was 65% higher than last year’s volume. Dagbladet also quoted Bitriver, one of Russia’s largest mining operators, as saying that demand for miners grew by 1.5 times in the first 10 months of this year.
“We work with legal entities and they started buying 30% more equipment per transaction than at the beginning of the year,” noted Artem Eremin, Chilkoot’s head of development. He added that the prices of GPUs started to fall in the second half of September and are still falling, citing Ethereum’s transition from proof-of-work to proof-of-stake mining as a main reason.
If before The Merge video cards were bought by miners in huge quantities, now the demand comes mostly from gamers, acknowledged Roman Kaufman, co-founder of Berezka DAO and Weezi. The crypto entrepreneur confirmed that ASICs are now gaining “huge popularity” in the Russian Federation.
Industrial mining companies in Russia can take advantage of the current market conditions, said Bitriver financial analyst Vladislav Antonov, who also pointed out that the increase in demand is due to a decrease in wholesale prices. The cost of mining hardware fell by almost 20% between August and October, he revealed.
Russia’s relatively low electricity prices, compared to many other regions of the world, is another factor supporting the demand for crypto miners, according to Terracrypto’s founder Nikita Vassev.
Despite the low valuations in the crypto market, with bitcoin (BTC) hovering in the $16,000 – $17,000 range, Russian mining companies still have a certain margin of safety, noted 51ASIC co-founder Mikhail Brezhnev. When you use the latest models of minting machines to mine for only $0.07 per 1 kWh, the production cost of 1 bitcoin is around $11,000.
The picture may improve further for crypto mining operations in Russia due to the expected influx of used mining equipment. As Brezhnev explained, many mining companies, mainly foreign-based and financed by borrowed capital or customers, have failed to optimize their activities and may go out of business amid the current bear market. He believes their mining machines will most likely be bought in bulk by others who want to enter the industry.
The comments of the experts interviewed by Kommersant come after previous reports revealed significant growth in revenue and electricity consumption in Russia’s mining sector over a period of several years. However, this year’s crypto winter and sanctions imposed in response to Moscow’s invasion of Ukraine hurt crypto miners in Russia and some foreign investors have already pulled out of the country.
Do you think the prices of ASIC miners in the Russian market will continue to fall? Share your expectations in the comments section below.
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