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Russia is now in second place in terms of energy capacity engaged in cryptocurrency mining, new data suggests. Despite persistent regulatory uncertainty and the negative effects of sanctions, the amount of power devoted to the sector has grown, reaching record highs this year.
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) during the first three months of the year.
The US remains the clear leader with 3 to 4 GW of mining capacity, Russian business newspaper 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 paper detailed.
Bitriver noted that the positive trend for Russia is linked to last year’s reduction in mining activity in Kazakhstan, where authorities have shut down authorized mining data centers and gone after illegal crypto farms due to power shortages. The central Asian nation’s growing power deficit has been blamed for the influx of miners following China’s crackdown on the industry. A law limiting their access to cheap, subsidized electricity came into effect in February.
The US also leads in terms of share of the global hashrate. However, growth in the US market is slowed by rising electricity prices, reduced profitability in mining and the abolition of tax incentives in some areas, noted Bitriver CEO Igor Runets and further commented:
In addition, the vast majority of equipment was purchased by American miners on credit, so many over-leveraged companies are about to go bankrupt or have already gone bankrupt.
The actions of US regulators also draw the attention of market participants, added Roman Nekrasov, co-founder of the Encry Foundation, which represents IT companies that provide services in the field of blockchain and technological 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 cryptomining sector could be even higher. Quoted by the crypto news Bits.media, he said that the Russians use about 800,000 ASIC miners, whose combined power exceeds 2.5 GW.
According to research published in August, the electricity consumption of Russian miners increased 20 times over 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 climate in regions such as Irkutsk. However, the future remains unclear in the absence of regulations. A bill designed to introduce rules for mining has yet to be passed by parliament in Moscow.
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Image credit: Shutterstock, Pixabay, Wiki Commons, Bitriver
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