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1 Aug, 2023 10:23

Sanctions fuel crypto mining boom in Russia

Bitcoin mining machines have been flowing into the country, CoinDesk reports
Sanctions fuel crypto mining boom in Russia

The cryptocurrency mining industry has been booming in Russia in the wake of the sweeping sanctions imposed by Western countries, CoinDesk reported last week, citing experts.

The outlet was told by Sergey Arestov, the CEO of miner BitCluster, that in recent months, good conditions for crypto mining have formed in Russia due in part to the rise in the price of Bitcoin.

Despite pressure on banking, sanctions may have in fact boosted the Russian mining industry, CoinDesk wrote, citing a report by Cryptocurrency Mining Group (CMG). It stated that first of all, mining offers an alternative revenue stream for power producers who have been hit by the economic downturn, and secondly, it facilitates the conversion of Russian rubles to Bitcoin, which can be exchanged globally, unlike Russia’s fiat currency.

CoinDesk’s report also cited Ethan Vera, the chief operating officer at global mining services firm Luxor Technologies, who stated earlier that more crypto mining machines are flowing into Russia than anywhere else in the world.

None of the “sanctions targeting Russia completely prohibit involvement in the mining sector,” according to David Carlisle, the vice president of policy and regulation at blockchain analytics firm Elliptic. He cited “significant risks,” however, for firms operating in Russia’s mining sector, claiming they can’t do business with sanctioned entities, including mining hosting firm BitRiver, or make payments to state banks and companies.

Industry experts say that increased regulatory scrutiny regarding cryptocurrencies and taxation in the US and elsewhere have made Russia even more competitive. They also cited cheap energy costs as having encouraged miners in Russia to ramp up their operations.

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