Russia is now the world’s second-biggest crypto miner, according to a Friday report by Russian news outlet Kommersant. According to this report, data from Russia’s biggest mining company, BitRiver, shows that the Russian Federation attained a mining power of 1 gigawatt (GW) during the first quarter of 2023 to displace the Republic of Kazakhstan from its position.
As expected, the United States still remains the largest crypto-mining nation with a capacity of 3-4 GW. That said, other nations that rank in the top 10 according to BitRiver’s report include the Gulf countries, Canada, Malaysia, Argentina, Iceland, Paraguay, and Ireland.
Russia’s Rise In Mining Power
For some years now, Russia has held third place behind Kazakhstan and the U.S. However, the country’s recent change in approach towards the cryptocurrency sector appears to have begun paying dividends.
Given the heavy international sanctions on Russia due to its ongoing war with Ukraine, the transcontinental nation began exploring the potential of this decentralized cryptocurrency world.
This has led to the government creating an enabling environment for crypto-based activities, including mining.
A good example of this is the subsidization of the operating costs of a 100-megawatts (MW) mining facility currently under construction in Siberia. These subsidies included slashed electricity costs, lower tax rates, and land and property tax exemption.
However, it is worth noting that Russia’s rise to second place in mining power was also mediated by the introduction of stringent rules in Kazakhstan limiting mining activities.
In late 2022, the Parliament of Kazakhstan introduced a law requiring crypto miners to obtain a license. This bill aimed to regulate mining activities and protect the nation’s energy supply.
This law led to a drastic decrease in the mining capacity of Kazakhstan, with the Asian nation falling from the second to the ninth position in the top 10 crypto mining nations, according to BitRiver.
Could Russia Catch Up With the United States?
Considering Russia’s latest feat, there are speculations about the country’s ability to catch up with the U.S. and maybe become the biggest crypto miner in the world.
Ordinarily, one could say that Russia is well placed to attain this feat considering numerous areas in the nation present low electricity costs and a favorable climate allowing mining operators to avoid spending on cooling equipment.
Moreover, the crypto mining industry in America is facing critical issues such as electricity price hikes, zero tax incentives and reduced profitability. In addition, the U.S. federal government has yet to determine the status of cryptocurrency and digital assets.
Total Crypto Market valued at $1.13T | Source: TOTAL chart on Tradingview.com
However, there are still concerns about crypto mining in the Russian Federation, including the lack of a federal regulatory framework. Many speculate that the eventual introduction of mining regulations could positively and negatively affect the industry.