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- What – Russia is reportedly the second-largest Bitcoin mining hub behind the United States, per a Cambridge Center for Alternative Finance report.
- Why – The research paper revealed that Russia accounts for 8% of the world’s total hashrate distribution.
- What Next – The US is the leader with a 16.8% share.
The Cambridge study also shows that China, once the largest Bitcoin mining hub in the world, has seen its share drop significantly due to the country’s crackdown on cryptocurrency mining activities. In April 2021, China’s National Development and Reform Commission announced it would eliminate Bitcoin mining from the country, citing concerns over energy consumption.
Russia has emerged as a prominent destination for Bitcoin mining operations, mainly due to its low electricity prices, cold climate, and abundant natural resources. With the current global supply chain disruptions and rising mining equipment prices, Russia’s cheap electricity prices have become a crucial factor for miners.
According to data from the Russian Association of Crypto economics, Artificial Intelligence, and Blockchain, the country’s Bitcoin mining industry generated more than $1.7 billion in revenue in 2020. The association further revealed that the number of cryptocurrency miners in Russia had doubled over the past year, with over 6,000 crypto-mining companies operating there.
Russia has also been taking steps to develop its digital economy, with the government considering the implementation of a digital ruble to compete with other central bank digital currencies (CBDCs) such as the Chinese digital yuan and the European Union’s digital euro. A digital ruble could lead to more widespread adoption of cryptocurrencies in Russia, including Bitcoin.
Despite Russia’s growing influence in the Bitcoin mining industry, the country’s stance on cryptocurrency regulation remains unclear. The Russian government has been slow to regulate the industry, leading to a lack of clarity and legal certainty for crypto companies operating in the country. However, this may change soon as the government has been considering new crypto regulations for some time now.
In 2019, the State Duma, Russia’s lower parliament, approved a bill on digital assets that defines cryptocurrencies as property and establishes rules for their ownership and circulation. The bill was a step forward in terms of providing legal clarity for crypto companies, but it did not address the issue of cryptocurrency mining, leaving a regulatory gap that needs to be filled.
Earlier this year, Russian Deputy Finance Minister Alexei Moiseev suggested that the government consider new legislation regulating cryptocurrency mining activities. Moiseev stated that the proposed regulations would address energy consumption and taxation issues.
The proposed regulations, however, have not yet been implemented, leaving cryptocurrency miners in Russia uncertain. The lack of regulatory clarity has also led to concerns about the safety of investments in the industry, as crypto companies operating in the country are not subject to the same level of oversight and consumer protection measures as traditional financial institutions.
In conclusion, Russia’s growing influence in the Bitcoin mining industry is undeniable. The country’s cheap electricity prices, cold climate, and abundant natural resources have made it an attractive destination for miners looking to reduce their operating costs.
With the rising global demand for Bitcoin and other cryptocurrencies, Russia’s share of the world’s Bitcoin mining activities will likely continue to increase.
However, the lack of regulatory clarity in the country is a cause for concern. The government’s slow response to regulating the industry has led to a lack of legal certainty for crypto companies operating in the country. The Russian government must take decisive action and provide clear regulations for the cryptocurrency industry to ensure investor protection and foster sustainable growth.
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