​Russia for the first time ranks second in the world in terms of mining capacity

What’s new? At the end of Q1 2023, Russia for the first time rose to second place in the world by the volume of capacity involved in cryptocurrency mining, with an indicator of 1 GW. In this, the country is significantly inferior to the United States, where the mining capacity reaches 3-4 GW. The publication Kommersant writes about it with reference to the data provided by the BitRiver mining company. The top ten also included the Gulf States (700 MW), Canada (400 MW), Malaysia (200 MW), Argentina (135 MW), Iceland (120 MW), Paraguay (100-125 MW), Kazakhstan (100 MW), and Ireland (90 MW).

Kommersant’s material

What else is known? From 2020 to 2023, Russia ranked third in the rating. At the same time in 2021, the second line was Kazakhstan, and in 2020 was China. According to BitRiver representatives, Russia’s coming in second place is due to the restrictions imposed on the industry in China and Kazakhstan because of the power shortage. Thus, in China, mining has been banned since July 2021, and at the end of 2022, Kazakh miners were required to obtain a license.

Kazakh miners were required to sell up to 75% of the mined cryptocurrency to exchanges

Platforms must be registered in the special economic zone of Kazakhstan

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The US market has also seen problems with rising electricity prices, reduced profitability of cryptocurrency mining, and the elimination of a number of benefits. According to ENCRY Foundation co-founder Roman Nekrasov, the actions of US regulators could cause market redistribution. In addition, the legal status of cryptocurrency in America has not been defined, and no final decision has been made regarding PoW mining.

Earlier, New York State imposed a two-year moratorium on this type of mining, and President Joe Biden proposed a 30% energy tax on the industry. In addition, many local miners were buying equipment on credit and faced financial difficulties late last year as a result of the decline in the BTC rate. Thus, one of the largest companies in this field, Core Scientific, filed for bankruptcy with debts of $500 million.

Despite reaching the second position in the rating, the future of mining in Russia remains in question. So far, the draft law on the regulation of the industry has not passed a single reading in the State Duma. According to 51ASIC co-founder Mikhail Brezhnev, the regulators’ actions can both positively affect the industry and significantly slow down its development. In addition, the industry is facing geopolitical risks associated with increased sanctions against both the companies themselves and their partners abroad.

Kazakh miners were required to sell up to 75% of the mined cryptocurrency to exchanges

Platforms must be registered in the special economic zone of Kazakhstan

Read further

Mining in the Russian Federation. The State Duma plans to pass a draft law on liability for illegal mining in the first half of 2023. Earlier, the Energy Commission proposed a complete ban on cryptocurrency mining in residential buildings.

In March, the Ministry of Finance proposed to oblige miners to declare income. The draft law provides for a penalty of up to two years in prison and a fine of up to 300 000 Russian rubles (RUB) in case of evasion for three years at least two times for incomes over 15 million RUB. If the amount is more than 45 million RUB, up to four years in jail, community service for the same period, and a fine of up to 2 million RUB. Also, the Ministry of Finance supported the tax rate for miners in the amount of 7-20%.

The Ministry of Finance explained the delay in adopting a law on the legalization of mining to disagreements with the Central Bank and law enforcement agencies.

For how the mining industry works in Russia, see GetBlock Magazine’s article.