The Russian mining market is experiencing unprecedented growth. Experts predict that crypto mining volumes will increase by 20-40% by the end of this year.
Local media Kommersant reports that Russia currently ranks second in terms of mining volumes, following the United States. However, the lack of industry regulation may negatively impact this situation.
Crypto Mining in Russia is Still Profitable, but Will It Be Sustained?
The domestic crypto mining market is expanding at a record pace and shows significant potential for further growth. Last year, Russian companies mined about 54,000 Bitcoin (BTC) worth $3.5 billion. Meanwhile, mining capacity reached 2.2 gigawatts (GW), a 120% increase from 2022’s capacity of 1 GW.
For comparison, the US mined 143,000 BTC, and its mining capacity grew from 3.4 GW in 2022 to 5.3 GW in 2023. This marks only 55.88% growth.
Experts say that despite the risks, technical failures, volatility in the crypto market, and the recent halving, Bitcoin mining in Russia remains profitable. However, profitability is mainly limited due to industrial scale.
According to Mikhail Brezhnev, the co-founder of the mining equipment supplier 51ASIC, a farm with 200 highly efficient ASICs with a capacity of 200 hash per second (H/s) can produce 1 BTC per month. Despite that, at the current Bitcoin exchange rate, all expenses are “more than recouped,” mainly due to fairly low energy costs.
Nikita Vasev, the founder of the online crypto mining forum TerraCrypto, noted that low electricity tariffs attract miners. In addition, a cool climate supports their activities, which reduces the cost of cooling equipment.
Nonetheless, it is important to note that the mining industry in Russia is growing quickly due to the lack of a regulatory framework. Should these frameworks suddenly appear, many miners may face legal problems. This could directly affect the profitability of crypto mining in the country.
Yet, there is some progress in regulating the mining industry in Russia. Officials proposed creating a special register of miners and introducing a separate code for the sector in the All-Russian Classifier of Types of Economic Activities (OKVED).
Additionally, the officials raised electricity tariffs for crypto miners. Last winter, crypto miners were blamed for numerous accidents at power plants.
In general, they promised to adopt a bill on sector regulation this spring. The Chairman of the State Duma Committee on the Financial Market, Anatoly Aksakov, repeatedly stated this. However, this has yet to happen.