Crypto mining in Russia is on the verge of a major evolution. While the question of the possible Russian legalization of mining is still being debated, a new piece of information has surfaced: the country’s mining companies are planning to inject $4 billion into the development of new datacenters.
Crypto mining booms in Russia
At a media event in Irkutsk, Sergei Bezdelov head of Industrial Mining Association (IPM), a revealed that companies in the sector are considering to invest approximately $4 billion in the development of new data centers.
“We are ready to invest around $4 billion in the creation of new data centers” he said.
These facilities will not be limited to crypto mining, but will also contribute to the government’s data economy project, saving Moscow over $32 million.
Irkutsk Oblast has become the epicenter of Russia’s mining industry, accounting for almost a quarter of the country’s entire sector. However, this concentration raises concerns about potential pressure on power grids. To address this, the Ministry of Energy is considering raising tariffs for miners, with the aim of deterring new entrants and slowing the expansion of existing players.
However, despite these concerns, experts believe that the Russian energy system as a whole will remain in surplus. Sergei Sasim, director of Center for Research in the Electric Power Industry of NRU (National Research University) « Higher School of Economics » points out that mining is not the only cause of the projected deficits and that rate increases will not be a panacea.
From him, Russian Industrial Mining Association hopes that this investment proposal will prompt the government to reconsider its position on increasing electricity tariffs for mining companies.
Crypto mining in Russia, an alternative source of liquidity to circumvent international sanctions?
Against a backdrop of international sanctions, crypto mining players in Russia are calling on policymakers to consider the potential economic benefits of this activity. Dmitry Zuev, CEO of the mining company NGE Farm points out that mining could enable Russia to develop a universal, decentralized source of liquidity for international transactions thus circumventing the restrictions imposed by the sanctions.
Several Russian companies are already using crypto payments to evade sanctions and procure restricted equipment. This practice could become widespread if the government decides to legalize the mining industry, a possibility raised by Anton Tkachev a leading political figure.
Moreover, legalization of the mining industry could generate significant tax revenues for the state, estimated at over $540 million per year by Sergei Bezdelov last January.
These additional revenues would be particularly welcome for the Russian government, which is facing increasing economic pressure due to international sanctions. Against this backdrop, the development of the mining crypto is a strategic opportunity for Russia to strengthen its economy. It is thus becoming more closely connected to international web3 market finance, while at the same time investing in a high-growth technology like the other BRICS countries.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
