Russian cryptocurrency mining sector to surge by 20–40% in 2024

The Russian crypto mining industry is poised for substantial growth, with projections indicating an expansion “by between 20% and 40%” in 2024, according to a recent report. The media outlet Overclockers disseminated these insights, which originated from BitRiver, Russia’s largest crypto mining firm. BitRiver is instrumental in a legislative push that could see the sector’s “legalization.”

The report’s analysts credit this potential growth to Russia’s “low cost of electricity” and the “absence of strict regulation by authorities,” which are providing “good growth dynamics” for crypto miners. Sergei Bezdelov, Director of the Industrial Mining Association, highlighted that the industrial crypto mining market “doubled in size” in 2023. BitRiver reported that Russian Bitcoin miners collectively accumulated about 54,000 BTC last year, reinforcing Russia’s position as one of the world’s top crypto mining nations. BitRiver also noted that “over 95%” of Russian miners’ “computing resources” are dedicated to BTC mining. However, Roman Nekrasov, co-founder of the Encry Foundation, estimated that BTC mining constitutes 90% of Russian efforts, with the remaining 10% focused on altcoins like Litecoin (LTC) and Kaspa (KAS).

Currently, crypto mining in Russia lacks formal legal status, with some in Moscow pushing for various forms of crypto bans. However, miners are advocating for the “legalization” of their industry, even if it involves paying taxes on their earnings. The Energy Ministry has suggested easing the load on overworked power grids by mandating that miners turn off their rigs for a fixed period each year. Recent legislative proposals include either restricting private mining or allowing energy providers to fine suspected “home” crypto miners.

Legal experts have commented on the situation. According to Elizaveta Vikhlyantseva, a lawyer at Vegas Lex, Russian law does not prohibit the construction of “crypto mining farms.” Yaroslav Shitsla, head of IT and IP dispute resolution at Rustam Kurmaev and Partners, stated that “cryptocurrency has already been recognized as property” under the “On Digital Financial Assets” law, despite criticism that the regulation lacks substance. The Financial Action Task Force (FATF) downgraded Russia’s compliance rating, reflecting these concerns.

Despite these regulatory uncertainties, industry experts remain optimistic about the future of crypto mining in Russia. Nikita Vassev, founder of Terracrypto, attributed the industry’s rapid growth to the country’s low electricity costs and favorable climatic conditions, particularly in Siberia, where miners benefit from reduced cooling expenses. Analysts also highlighted the potential for repurposing numerous production sites for Bitcoin mining. The “lack of strict control by local regulators” creates “positive conditions for cryptocurrency-related business,” fostering an environment conducive to the sector’s growth.

Moreover, the report noted that the mining industry’s expansion could significantly contribute to Russia’s economy, providing jobs and fostering technological advancements. With the ongoing legislative efforts and the mining sector’s inherent advantages, Russia could strengthen its position as a global leader in cryptocurrency mining.