Russia has emerged as the world’s second-largest crypto mining country, overtaking Kazakhstan, according to reports from Bitriver, Russia’s largest bitcoin mining provider. While the United States remains the largest crypto miner, generating 3-4 gigawatts of mining capacity, Russia’s capacity reached one gigawatt in the first quarter of 2023. China, which banned crypto mining in 2021, did not make Bitriver’s top 10 list.
The shift in rankings is due to the regulatory changes that have affected the crypto mining landscape in different countries. Kazakhstan had previously occupied the second spot in 2021, but it introduced restrictions on crypto mining activities, which saw its ranking slip to ninth. Meanwhile, The government introduced measures to combat the crisis, such as cutting off miners’ power supplies, tightening the regulatory framework, and introducing a differentiated tax rate. Russia’s mining capacity has grown, aided by its cold climate and regions that offer cheap electricity.
Cryptocurrencies are limited in Russia due to restrictive laws on cryptocurrencies, including a law on digital financial assets signed by President Vladimir Putin in 2020. While the law legalized cryptocurrencies, it banned their use for payment of goods and services. Cryptocurrencies have, however, been linked to Russia’s sanctions evasion strategies. The US blacklisted a bitcoin and ether address in February that it said may have been involved in Russian defense equipment sales abroad.
Despite restrictions on cryptocurrencies in Russia, its advancement in crypto mining rankings is not surprising. The country’s cold climate provides favorable conditions for mining operations that require low temperatures, and its regions offer affordable electricity, which is a critical factor in the mining process.
The Gulf countries follow as the third-largest mining power in the world with around 700 megawatts of combined power. Canada, Malaysia, Argentina, Iceland, Paraguay, Kazakhstan, and Ireland complete the top 10.
Experts predict that Russia’s mining activities are expected to grow further due to its favorable conditions for mining operations, while the US’ position is yet to be determined. It is unclear if the US will take measures to hinder mining activities and leave the top spot to Russia or increase its power to widen the gap.
In conclusion, Russia’s emergence as the second-largest crypto miner in the world highlights the growing importance of the mining industry in the global cryptocurrency landscape. While regulatory changes impact mining activities in different countries, the favorable conditions for mining operations in Russia make it an attractive destination for crypto miners looking to expand their operations. As the global demand for cryptocurrencies continues to rise, the mining industry is likely to play an even more critical role in the future of cryptocurrencies.