Recent figures show Russia has moved up to the second most powerful country in crypto mining, with energy consumption at record levels in 2018.
1 GW Electrical Power Used in Crypto Mining in Russia During Q1 of 2023
According to data from the largest Russian mining operator, Bitriver, the power required to mint new coins has hit 1 gigawatt in the first three month of the year. This means the nation has overtaken other countries to become the second most prominent for total power capacity of facilities dedicated to digital currency production.
The United States remains the clear leader, with 3-4 GW of mine capacity. Other countries in the top 10 are Gulf Countries (700 MW), Canada (400 MW), Malaysia (300 MW), Argentina (135 MW), Iceland (120 MW), Paraguay (100–125 MW), Kazakhstan (100 MW), and Ireland (50-60 MW).
Russia’s rise is likely linked to a reduction of mining activities in Kazakhstan last year. Authorities in the area have been shutting down mining data centers authorized by authorities and going after illegal cryptocurrency farms due to electricity shortages. In 2005, a law was passed that restricted their access to low-cost, subsidised electricity.
The U.S. is also the leader in global hashrate share. However, the growth of the American market is slowing down due to rising electricity costs, lower mining profitability and the removal of tax incentives in certain regions. Bitriver CEO Igor Runets commented on this:
In addition, most of the equipment was purchased by American Miners with credit are just one example of the many companies that are over-leveraged and in bankruptcy.
Market participants are paying close attention to the actions of U.S. regulators. Roman Nekrasov, co-founder of Encry Foundation, which represents IT firms that offer services in the fields of blockchain and tech innovation, is confident that they will trigger another major redistribution on the mining market.
Data provided by the head of the Russian Association for Cryptoeconomics, Artificial Intelligence and Blockchain (Racib), Alexander Brazhnikov, suggests the energy potential of the nation’s crypto mining sector may be even higher. The crypto news outlet Bits.media reported that Russians use approximately 800,000 ASIC miners, whose combined power rating exceeds 2.5GW.
Research published in August showed that between 2017 and 2022, the number of miners in Russia grew 200%. The availability of low-cost energy resources and cooler climates in areas such as Irkutsk are contributing to this. However, in the absence of regulations, it is uncertain what the future holds. A bill is still being considered to create rules for mining business owners.
Do you think Russia’s crypto mining sector will continue to grow? Please leave your comments below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Bitriver
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