Overview
• The total capacity of crypto mining facilities in Russia has been increasing in the past year, despite the market downturn and sanctions.
• Depressed prices of mining equipment and stronger interest from domestic customers have been identified as major factors for the trend.
• The capacity of Russian mining farms has exceeded 500 megawatts (MW) at the end 2022.
Growth Despite Sanctions
The total capacity of crypto mining facilities in Russia has been increasing in the past year, despite the market downturn and sanctions. Depressed prices of mining equipment and stronger interest from domestic customers have been identified as major factors for this trend. Bitriver, which was specifically targeted by U.S. sanctions, has actually doubled the number of its data centers and available capacity, realizing several large-scale projects in Russian regions.
Mining Advantages
With abundant energy resources and 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 industry growth due to financial restrictions imposed on Russia’s ability to use currencies to circumvent sanctions.
Unclear Prospects
BWCUG reported that new European and North American clients are reluctant to use Russian facilities due to unclear prospects for crypto mining legislation in Russia; a bill designed to regulate it was submitted to parliament but is yet to be adopted. EMCD also noted that profitability may decrease if special electricity tariffs or taxes are introduced for coin minting enterprises.
Conclusion
Despite these challenges, Russia continues to expand its cryptocurrency mining capacity thanks to depressed prices of equipment and strong local demand. The total capacity is expected to reach 500 MW by 2022, setting up miners for continued growth provided they can overcome regulatory uncertainty and other potential limitations imposed by electricity costs or taxation policies.