New data indicates that Russia now ranks second in terms of energy capabilities involved in cryptocurrency mining. Despite ongoing regulatory uncertainty and the negative effects of sanctions, the amount of power allocated to the sector has been increasing, reaching record levels this year.
1 gigawatt of electric power involved in cryptocurrency mining in Russia during the first quarter of 2023
Russia rose for the first time to the second place in the world in terms of the total capacity of facilities dedicated to the production of digital currencies. According to data provided by Bitriver, the country’s largest mining operator, the amount of energy used for minting reached 1 gigawatt in the first three months of the year.
Russian daily Kommersant reported that the United States remains the clear leader with 3-4 gigawatts of mining capacity. The top ten also includes the 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 related to last year’s reduction in mining activities in Kazakhstan, as authorities shut down authorized mining data centers and went after illegal crypto farms due to electricity shortages. A growing energy deficit in the Central Asian country has been blamed on an influx of miners in the wake of China’s crackdown on the industry. A law limiting their access to low-cost, subsidized electricity took effect in February.
The United States also leads in terms of global hash rate share. However, the growth of the US market is slowing due to higher electrification rates, lower mining profitability, and the removal of tax incentives in some regions, as Bitriver CEO Igor Runets further commented:
In addition, the vast majority of equipment was purchased by American miners on credit, so many companies with excessive leverage are in the process of bankruptcy or have already gone bankrupt.
Roman Nekrasov, co-founder of the Encry Foundation, which represents IT companies providing services in the field of blockchain and technical innovation, added that the actions of the US regulators are attracting the attention of market participants. He thinks they can spark another major redistribution in the mining market.
Data provided by the President of the Russian Association of Crypto Economy, Artificial Intelligence and Blockchain (sediment), Alexander Braznikov, indicated that the energy capacity of the cryptocurrency mining sector in Russia could be even higher. Citing cryptocurrency news outlet Bits.media, he said that about 800,000 are in use by the Russians ASIC Miners, the combined power rate exceeds 2.5 GW.
According to research published in August, the electricity consumption of Russian miners increased 20-fold over a five-year period, between 2017 and 2022. The development of industry in the country is facilitated by the availability of cheap energy resources and the cool climates of regions such as Irkutsk. However, its future remains unclear in the absence of regulations. A bill aimed at introducing rules for the mining business has not yet been passed by the parliament in Moscow.
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Image credits: shutterstock, pixabay, wikicommons, petriver
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