Russia Expands Its Crypto Mining Capacity, Report Reveals – Mining Bitcoin News

The total capacity of crypto mining facilities in Russia has increased over the past year, despite the market slowdown and sanctions, according to a survey of leading operators. Low prices for mining equipment and stronger interest from domestic customers have been identified as important factors for the trend.

Miners prepare for growth as total capacity of crypto farms in Russia reaches 500 MW

The capacity of Russian mining farms has exceeded 500 megawatts (MW) by the end of 2022, according to results of a poll of established industry players published by business newspaper Kommersant. The start of 2023 sets them up for continued growth, on the back of a recovery in the crypto market, but expansion could potentially be limited by electricity tariffs and taxes on miners, executives said.

Bitriver, the leader of the group, has eight crypto mining sites with a total rating of 300 MW. The power of the plants operated by the Ural Mining Company (UMC) is 88 MW. Bitcluster owns three 60-megawatt farms, EMCD operates 50 MW data centers in four different locations while BWCUG has one of 20 MW.

With abundant energy resources and a cool climate, Russia has certain advantages as a mining destination. However, the ongoing clash with the West over the war in Ukraine has affected the industry, with sanctions hitting Russia’s mining potential to limit the ability to use cryptocurrencies to circumvent economic restrictions.

But the penalties and the state of the crypto economy have had varying effects on the operations of the Russian mining companies. Bitriver, which was specifically targeted by US sanctions, has actually doubled the number of data centers and available capacity, and realized several large-scale projects in Russian regions, founder Igor Runets told Kommersant.

Meanwhile, BWCUG has reduced its mining capacity. The company explained that new European and North American customers are reluctant to use Russian facilities, despite the lower costs. The operator also highlighted the unclear outlook for crypto mining in terms of legislation. A bill designed to regulate mining in Russia was presented to parliament in November but is yet to be passed.

Alisa Tsukanova, Marketing Director at EMCD, noted that the profitability of the mining business could be reduced if the government introduces special electricity tariffs and taxes for minting businesses. The chairman of the State Duma Committee on the Financial Market Anatoly Aksakov spoke to the daily Izvestia about two options – either to impose a tax like the single tax on calculated income, with a rate in the range of 7.5 – 15%, or to tax profits at 20%.

The survey was carried out after a study revealed last October that bitcoin mining revenues in Russia grew 18-fold in four years before falling sharply in the second quarter of 2022. Another study published in August found that the power consumption of Russian miners had increased 20 times since 2017.

Do you think Russia’s crypto mining industry will continue to grow despite the challenges? Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’ quote: “To be a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.