Russia's bitcoin-mining industry is booming through war and sanctions
- Bitcoin mining machines are pouring into Russia amid its war in Ukraine, per CoinDesk.
- As the US market becomes saturated, mining-rig makers have expanded into Russia.
The bitcoin mining industry has proven to be an unexpected beneficiary of Russia's invasion of Ukraine and Western sanctions. Hardware manufacturers, according to CoinDesk, have been doing more business in the country, with more mining machines flowing into Russia than anywhere else in the world.
Thanks to its cheap energy and cold weather, Russia has long been a hub for bitcoin mining, and after China banned it in 2021, Russia gained even more market share — all of which has continued amid the war.
Although there's risk for foreign firms setting up shop in Russia, the conditions there and improving mining economics remain attractive, blockchain executives said at CoinDesk's Consensus 2023 festival.
Not only that, but heightened regulatory scrutiny and taxes in the US and other countries have made previous options less enticing.
To the crypto firm Cryptocurrency Mining Group, Russia will be the only nation to substantially accelerate hashrate growth, or the computational power being delivered to the blockchain.
"Russia had to divert its energy flow from EU in 2022 and being left with large excess capacity, bitcoin mining can be its new client," the company wrote in a report. With cheap energy being a major contributor to mining profits, the region looks poised to develop and attract more business.
Sources told CoinDesk that manufacturers Bitmain and MicroBT are active and participating in the Russian market, with Bitmain listing a Moscow office on its website. Both companies, according to the report, offer repair services for local miners in Russia.
Meanwhile, it's possible that wartime sanctions have actually provided a boon to the crypto industry.
First, bitcoin mining offers a different source of revenue for power producers hampered by the weakening economy. Not only that, but the sector facilitates exchanging rubles for bitcoin, which is accepted globally, unlike Russia's local currency.