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 major operators. Lower prices for mining equipment and renewed interest from domestic customers were identified as the main factors behind the trend.
Miners Brace for Growth as Total Crypto Farm Capacity in Russia Reaches 500MW
The capacity of Russian mining farms exceeded 500 megawatts (MW) at the end of 2022, according to the results of a survey of established industry players published by the business daily Kommersant. The start of 2023 sets them up for continued growth amid a recovery in the crypto market, but expansion could potentially be limited by electricity tariffs and taxes for miners, executives said.
Bitriver, the leader of the group, has eight crypto-mining sites with a combined power of 300 MW. The power of the facilities operated by Ural Mining Company (UMC) is 88 MW. Bitcluster owns three 60 megawatt farms, EMCD operates 50 MW of data centers in four different locations while BWCUG owns one 20 MW.
With abundant energy resources and a cool climate, the Russian Federation 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 its ability to use cryptocurrencies to circumvent financial restrictions. .
But the sanctions and the state of the crypto-economy have had different effects on the activities of Russian mining companies. Bitriver, which was specifically targeted by US sanctions, actually doubled the number of its data centers and its available capacity, carrying out several large-scale projects in Russian regions, its founder Igor Runets told Kommersant.
Meanwhile, BWCUG has reduced its mining capacity. The company explained that new European and North American customers are hesitant to use Russian facilities, despite falling costs. The operator also highlighted the unclear outlook for crypto mining in terms of legislation. A bill to regulate mining in Russia was submitted to parliament in November but has yet to be passed.
Alisa Tsukanova, marketing director at EMCD, noted that the profitability of mining activities could decrease if the government introduces special electricity tariffs and taxes for coinage companies. Speaking to the Izvestia daily, the chairman of the State Duma committee on the financial market, Anatoly Aksakov, mentioned two options: either impose a levy like the single tax on imputed income, with a rate of order from 7.5 to 15%, or tax profits at 20%.
The survey was conducted after a study revealed in October last year that revenue from bitcoin mining in Russia had increased 18 times in four years before falling sharply in the second quarter of 2022. Another study published in August established that the electricity consumption of Russian miners has increased 20 times since 2017.
Do you think the Russian crypto mining industry will continue to grow despite the challenges? Share your expectations in the comments section below.
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