New data suggest that Russia is currently in second place in terms of energy capacity engaged in cryptocurrency extraction. Despite ongoing regulatory uncertainty and the negative impact of sanctions, the amount of power devoted to the sector has increased and reached a record high this year.
1 GW of power for crypto mining in Russia in Q1 2023
Russia has emerged as the world’s second largest country for the first time in terms of total power capacity of facilities devoted to the production of digital currency. According to data provided by Bitriver, the country’s largest mining operator, the amount of electricity involved in coin minting reached 1 gigawatt (GW) in the first three months of the year.
The Russian economic newspaper Kommersant reported that the United States remains the clear leader with 3-4 GW of mining capacity. The top 10 also includes the Gulf States (700 MW), Canada (400 MW), Malaysia (300 MW), Argentina (135 MW), Iceland (120 MW), Paraguay (100-125 MW), Kazakhstan (100 MW), Ireland (90 MW), the newspaper detailed
Bitriver noted that the positive trend in Russia is related to a reduction in mining activity in Kazakhstan last year, where authorities have closed licensed mining data centers and pursued illegal crypto farms due to power shortages. The power shortages in Central Asian countries have been attributed to an influx of miners following China’s crackdown on the mining industry. A law restricting access to low-cost subsidized electricity went into effect in February.
The U.S. also leads in global hashrate share. However, rising electricity prices, declining mining profitability, and the elimination of tax incentives in some regions have slowed growth in the US market, said BitRiver CEO Igor Lunetz, who further commented:
In addition, since most of the equipment was purchased on credit by American miners, many of the over-leveraged companies are on the verge of bankruptcy or have already gone bankrupt.
The actions of U.S. regulators have also caught the attention of market participants, added Roman Nekrasov, co-founder of the Encry Foundation, which represents IT companies offering services in the field of blockchain and technological innovation. He believes they could trigger another major redistribution in the mining market.
Data provided by Alexander Brazhnikov, head of the Russian Association for Crypto Economy, Artificial Intelligence and Blockchain (Racib), suggests that energy capacity in the Russian crypto mining sector could be even higher. Quoted by crypto news outlet Bits.media, he said that Russians use about 800,000of energy; ASICminers’ total power output exceeds 2.5 GW.
According to a study published in August, Russian miners’ electricity consumption increased 20-fold in the five years from 2017 to 2022. The development of industry in the country is facilitated by cheap energy resources and the cool climate of regions such as Irkutsk. However, its future remains uncertain due to a lack of regulation. Moscow’s parliament has yet to pass a bill to introduce regulations on mining.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Bitriver.