US Treasury Department Sanctions Bitcoin (BTC) Mining in Russia

Penalties imposed on BitRiver and Russian miners

At the dawn of the third month of Russian-Ukrainian conflict, the US Treasury Department Just Added Mining Giant BitRiver as well as 10 of its subsidiaries operating in Russia to its list of “ Specially Designated Nationals “.

According to the official document issued by the United States Department, the Russian mining is an escape route for sanctions inflicted by the Euro-American coalition:

“By operating vast server farms that generate money by selling their mining capacity internationally, these companies are helping Russia monetize its natural resources. Russia has a major advantage in cryptocurrency mining thanks to its energy resources and cold climate. »

Note that Russia had also become a destination of choice for a certain part of Chinese miners who had been forced to stop their activities last year, when the middle country represented up to two-thirds of global mining share in April 2021.

A mining giant in sight

BitRiver, known in particular for its mining farm in Siberia powered by local hydroelectric powerhad estimated that it represented approximately 2% of Bitcoin (BTC) hashrate alone. The firm employs over 200 people across Russia alone and also supplies mining equipment internationally.

Although no direct sanction is mentioned in the official communiqué, the latter alludes to the materials used and payment methods necessary for the operation of the mining farm:

“However, mining companies are dependent on imported IT equipment and fiat currency payments, which makes them vulnerable to sanctions. The United States is determined to ensure that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions. »

Direct Sanctions on Russia Over Bitcoin Mining could prove significant for cryptocurrencysince the Russian Federation represents 11.23% global mining share according to the latest data. However, it remains possible that part of it will naturally transfer to North America, which currently represents 35.4% of the mining shares.

Last February, BitRiver issued a statement indicating that it was becoming the first Russian company to become carbon neutral via an audit carried out by a British company.

? To go further: Bitcoin – mining, energy consumption and ecology

What impact for Bitcoin mining globally?

This announcement comes as President Putin was supportive of cryptocurrency mining from the beginning of 2022, a position which was then in total opposition to that of the Central Bank of the Russian Federation, who then pleaded for a total ban on cryptocurrencies on Russian territory.

However, the Central bank seems to have changed its mind on this subject, since it recently gave the green light to Sberbank to issue digital assets, in particular to mitigate the economic sanctions imposed by Europe and the United States.

As we mentioned earlier, Russia currently represents more than 11% of global mining sharesand a shutdown of mining systems on its territory could have an impact that goes far beyond Russian soil alone.

This would imply de facto a redistribution of hashrate around the worldwhich would have the effect of mechanically reducing its overall rate and which could strongly shake the cryptocurrency market.

Russian miners could then be tempted to continue their operations in Kazakhstana country bordering Russia which has the second largest hashrate in the world, but which must already compensate for significant taxes on mining and where its miners are regularly hampered by their government.

It is therefore difficult to predict the future and to guess what the reactions of Russia will be, but more sanctions from the United States on Russian mining could have serious consequences internationally.

? To read on the same subject: Russia will not be able to circumvent sanctions with cryptocurrencies, according to experts

Sources: US Treasury Department, Chainbulletin