As mounting regulatory pressures, tax burdens, and escalating energy costs afflict countries such as the United States and Kazakhstan, experts in Russia anticipate a significant migration of crypto miners. Amidst these developments, Russia is positioned to dominate up to 18% of the global bitcoin hashrate, according to industry insiders.
Against the backdrop of adverse conditions for the industry elsewhere, the Russian Federation is poised to strengthen its leadership in the field of crypto mining. Intelion Data Systems, a prominent Russian importer and distributor of mining hardware, predicts that the country’s share in the Bitcoin hashrate could potentially reach 18%.
According to the Cambridge Center for Alternative Finance’s calculations in January 2022, Russia accounted for nearly 4.7% of the global hashrate, securing the fifth position among major mining destinations. However, the tightening of regulations in leading countries could trigger another substantial wave of miner migration, similar to the one that followed China’s crackdown on the sector in 2021.
The introduction of new restrictions on access to low-cost energy, coupled with surging electricity rates and higher taxes, may prompt the relocation of up to 6% of mining capacities from the United States, Canada, and China, as well as approximately half of Kazakhstan’s miners to Russia. The Intelion team, as quoted by the crypto page of the Russian business news portal RBC, projects this potential migration scenario.
In this event, Russia’s share in the global Bitcoin hashrate could surge to 18%, resulting in electricity consumption of 3.95 GW with an average cost of 128 billion rubles (almost $1.7 billion). Back in April, Bitriver, a leading Russian mining operator, estimated that Russia had already climbed to second place in terms of total power capacity among facilities engaged in digital currency extraction.
Russia possesses all the necessary elements to reshape the existing global crypto-mining market hierarchy. The country boasts low-cost electricity, ample reserves of available capacities, and developed energy infrastructure across multiple regions.
Timofey Semyonov, the CEO of Intelion Data Systems, also underscored the increased efforts of numerous Russian companies to expand their operations, along with government support for the industry. Pending the adoption of long-awaited mining legislation, official statements from Moscow have indicated before now that Russian authorities intend to leverage the nation’s “competitive advantages” as a prime mining destination, as highlighted by President Putin in January 2021 when asked his ministers and bankers to report back With consensus on cryptocurrencies.
To establish a favorable investment climate, the experts at Intelion also emphasized the need for mining in Russia to be recognized as a “legal business activity with clear rules of the game.” They anticipate that the developing crisis in the banking sectors of the United States and Europe will fuel the growing demand for Bitcoin as a hedging tool and heighten interest in cryptocurrencies among traditional financial institutions, resulting in increased global mining volumes.
Written By Agbo Obinnaya
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