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The increasing demand for crypto mining hardware during the fourth quarter of 2024, resulting from a softening regulatory stance, could make Russia one of the biggest crypto miners in the world.
According to a report from a local news outlet, the demand for mining rigs and related hardware was expected to triple year-on-year in Russia. Citing Sergey Bezdelov, the chairperson of the Industrial Mining Association, the newspaper said this was caused by the new crypto regulations that have allowed individuals and businesses to legally participate in cryptocurrency mining as long as they stay within a prescribed energy consumption range.
Foreign Participants Interested in Russian Mining Hardware
Bezdelov reacted to comments from a top lawmaker who proposed that the country was moving towards a softer crypto regulatory stance. According to the Industrial Mining Association, numerous foreign market participants were interested in purchasing mining hardware and the local mining industry, where there was also high interest. Bezdelov revealed that some interest in Russian mining hardware specifically came from “fellow BRICS member states.”
Citing Bitriver, the largest bitcoin mining hardware provider in the country, local media outlets reported in early 2024 that Russia had become the world’s largest crypto mining country. The United States currently holds the pole position and remains the top crypto miner globally with a 3-4 gigawatt mining capacity. Russia, on the other hand, achieved a 1 gigawatt mining capacity between January and March 2023.
Russia is The Second Largest Crypto Miner
Russia took the second place after dislodging Kazakhstan, which introduced stringent crypto regulations surrounding mining activities in 2022. According to Bitriver, Kazakhstan dropped to the ninth position globally. China, previously a top destination for Bitcoin miners, did not reach the top 10 countries after it banned mining in 2021.
While Bitcoin use in Russia has been limited due to existing regulations on crypto, including Vladimir Putin’s law in 202 that legalized cryptocurrencies but banned their use as a form of payment for goods and services, things are beginning to take a new trajectory following a softer regulatory stance and emerging crypto regulations. Moscow has been at the forefront of considering using cryptocurrencies as an alternative to the US dollar to avoid the effects of economic sanctions.
Miners Given an Energy Consumption Threshold
The United States blocked Bitcoin and Ether crypto addresses in February 2024, saying they may have been involved in Russian defense equipment sales abroad. The European Union followed suit by imposing a total ban on crypto-based transactions between their citizens and Russian citizens when they imposed an eighth round of economic sanctions following Moscow’s invasion of Ukraine.
As per the new law, “Individuals can mine crypto assets without being included in a state-run register, but within the limits of the electricity consumption threshold. If they go beyond this threshold, citizens must register as an individual entrepreneur and apply for inclusion on the register.”
Conclusion
According to Bezdelov, the changing stance toward cryptocurrencies has opened up the crypto mining market, doubling in one year from May 2023 to April 2023. The expert believes that the more user-friendly crypto regulations have further boosted Russian mining hardware’s popularity, especially after the new law was enacted on November 1, 2024. The new law allowed private companies and individual entrepreneurs to mine crypto legally as long their electricity consumption does not exceed 6,000 kWh of energy per month.
Frequently Asked Questions (FAQs)
Is the use of crypto allowed in Russia?
Despite a ban on the domestic use of cryptocurrency for payments, Russia uses cryptocurrencies. Available data shows that Russia is one of the top countries in the Global Crypto Adoption Index.
Does Russia use crypto to evade sanctions?
Russia adopted the use of crypto as a way of avoiding trade sanctions. The country’s central bank proposed several alternative payment systems, including Bitcoin and other cryptocurrencies, to help with international payments as an alternative to foreign currencies.
How does Russian law define cryptocurrency?
According to Russian law, cryptocurrencies are electronic data that can be used as a payment method or investment. However, Russians cannot use crypto to pay for goods and services.
