Leading operators conducted a survey, which revealed that the past year has seen Russian crypto mining facilities expand their capacity, even though sanctions have been imposed and the market is facing a downturn.
The major factors that have contributed to this trend are the increased interest from domestic users and the decline in the prices of mining equipment.
Results of a survey conducted by industry experts revealed that the end of last year saw the capacity of crypto mining farms in Russia exceed 500 megawatts (MW).
The start of 2023 saw them continue to record growth in light of the recovery that was seen in the crypto market.
However, executives said that there was a possibility that the expansion could be limited because of taxes applicable to miners and the higher electricity tariffs.
The leader in the group is Bitriver which has a total of eight crypto mining sites in the country that have a capacity of 300 MW combined.
Ural Mining Company (UMC) comes next and its facilities have a total capacity of 88 MW. Three crypto mining sites are operated by Bitcluster that have a capacity of 60 MW.
There are a total of four data centers under the operation of EMCD and they have a total capacity of 50 MW, while one center of BWCUG has a 20 MW capacity.
The Russian Federation has become a popular hotspot for crypto mining because it can offer advantages, such as a cool climate and an abundance of energy resources.
However, the crypto mining industry in the country has taken a hit due to the ongoing tensions with the West over the conflict with Ukraine.
Russia’s mining potential has suffered due to Western sanctions because their goal is to prevent the country from using cryptocurrency to evade the sanctions.
But, the state and troubles of the crypto economy have had a completely different impact on the operations of mining companies in Russia.
The sanctions’ impact
US sanctions specifically targeted Bitriver, but the company has actually been able to double its mining capacity and the number of data centers.
Igor Runets, the founder of Bitriver, said that they were able to accomplish this by launching a number of large-scale projects in different regions of Russia.
Meanwhile, there has been a decline in the mining capacity of BWCUG. According to the firm, new North American and European clients are reluctant to use the facilities, even though costs are lower.
The operator also said that the lack of clarity in terms of legislation for crypto mining has also had an impact. A bill aimed at crypto mining regulation in Russia was submitted in November to the parliament.
But, there has been no update on it as yet. EMCD’s marketing director, Alisa Tuskanova, said that the mining business might go down if the Russian government introduces taxes for mining companies and special electricity rates.
Anatoly Aksakov, the chair of the Financial Markets Committee of the State Duma, has mentioned these two strategies already.