Russia has been ranked as the second-largest cryptocurrency mining country in the world, according to a recent report from Kommersant, a Russian-based newspaper publisher. The United States tops the list of all crypto-mining countries, but the uncertainty in the regulation of cryptocurrencies there may trigger a new redistribution of the market. In Russia, the legal framework for miners has not yet been developed, which could potentially slow down the growth of the industry.
According to the BitRiver, for the first time, Russia reached the second place in the world in terms of the amount of power involved in mining, with 1 GW between January and March of 2023. The United States remains the leader with 3-4 GW of mining capacity. The top 10 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).
Bitriver’s top 10 list does not include China, which prohibited cryptocurrency mining in 2021.
Russia was previously ranked third in cryptocurrency mining. The Cambridge Center for Alternative Finance reported that by the end of 2021, Russia had surpassed both the United States and Kazakhstan in terms of bitcoin mining capacity. In 2020, the same center reported that China accounted for 65% of the total bitcoin hash rate, while the US and Russia accounted for 7.2% and 6.9%, respectively.
The positive dynamics in Russia’s growth in mining capacities are associated with the limitation of mining activities in Kazakhstan last year and earlier in China due to a shortage of electricity. The development of the American market is slowed down by rising electricity prices, reduced mining profitability, and the abolition of tax incentives. Additionally, many over-leveraged American miners are in the process of bankruptcy or have already gone bankrupt.
According to BitRiver CEO Igor Runets, the progress of the American market is impeded by surging electricity costs, declining mining profitability, and the elimination of tax benefits. “Furthermore,” he clarifies, “most American miners acquired their equipment on credit, resulting in several over-leveraged firms being bankrupt or in the process of bankruptcy.”
Notwithstanding this, as the United States still holds the top spot in overall hash rate, all eyes of market players are focused on the decisions of American regulators, as per ENCRY Foundation’s co-founder, Roman Nekrasov.
However, there are still factors that hinder the development of the mining industry in Russia. In particular, the bill on regulating mining was submitted to the State Duma in November last year but has not yet passed a single reading. Balanced and verified legislation will allow participants in the mining industry to plan their operational and financial activities, develop and implement large projects, attract investments, and develop related areas of the Russian economy.
Foreign policy risks are also growing for Russian miners due to the strengthening of sanctions against Russian companies and secondary sanctions against banks, exchanges, pools, and other foreign participants who work with Russian miners.
Overall, the growth of the mining industry in Russia is quite expected, given the low cost of electricity and favorable climate for mining in some regions. However, the development of the industry will depend largely on the certainty in the regulation of mining and corresponding work of regulatory authorities, which will have a great influence on the market – both positively and negatively.
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This article was republished from azcoinnews.com
