Russian Cryptocurrency Mining Sector to Grow by 20-40% in 2024 – Report

Last updated: May 20, 2024 11:00 pm EDT | 2 minute read

Russian cryptocurrency mining industry could grow “between 20% and 40%” in 2024, says a new report.

According to the media Overclockersthe claims come from industry insiders in a BitRiver report.

The latter is that of Russia the largest player in cryptocurrency mining. The company is one of the driving forces behind a recent legislative push that could lead to the “legalization” of the industry.

Russia’s Cryptocurrency Mining Industry ‘Continues to Grow’

In the report, analysts say that the “low cost of electricity” and “absence of strict regulation by authorities” translate into “good growth dynamics” for cryptocurrency miners.

The report’s authors quoted the director of the Industrial Mining Association, Sergei Bezdelov, as saying that the size of the industrial cryptocurrency mining market “has doubled” in 2023.

BitRiver says that last year, domestic Bitcoin miners amassed a grand total of around 54,000 BTC.

The firm said Russia “continues” to be one of the world’s largest cryptocurrency mining powers.

BitRiver further stated that “over 95%” of Russian miners’ “computing resources” are used to mine BTC.

However, not all experts agree on this statistic. Encry Foundation co-founder Roman Nekrasov said he believes BTC accounts for 90% of Russian mining efforts.

He said that 10% of Russian miners focus on altcoins like Litecoin (LTC) and Kaspa (KAS).

KAS prices in the last seven days. (Source: CoinMarketCap)

Market still largely unregulated

Currently, mining has no legal status in Russia. However, many in Moscow have proposed banning cryptocurrencies in various forms.

The miners want the legislators “hurry up and legalize” their sectoreven if it means paying taxes on their earnings.

The Energy Ministry has suggested easing the load on overworked networks by forcing miners to shut down their plants for a fixed period of time each year.

Reportedly, even the latest legislative proposals suggest limiting private mining OR allowing energy suppliers to fine alleged “domestic” cryptocurrency miners..

Low energy costs generate greater growth potential

Legal experts intervened and explained to the authors of the report that legal provisions for cryptocurrencies and cryptocurrency mining already exist in Russia.

Elizaveta Vikhlyantseva, a lawyer at the Vegas Lex law firm, noted that there is nothing in Russian law that “prohibits” the construction of “crypto mining farms.”

Meanwhile, Yaroslav Shitsla, head of the IT and IP dispute resolution department at the law firm Rustam Kurmaev and Partners, said that “cryptocurrency has already been recognized as property.”

Shitsla pointed to the law “On Digital Financial Assets” as evidence of this statement. And while this may be true, critics have called this law “insubstantial.”

The Financial Action Task Force (FATF) seems to agree. It has downgraded Russia’s compliance rating accordingly.

Regardless, experts struck an optimistic tone. Nikita Vassev, the founder of Terracrypto, said that the rapid growth of mining in Russia is due to the low cost of electricity.

Vassev added that Russia’s “climatic conditions” are also favorable for miners.

The expert notes that “most miners choose to operate in Siberia thanks to the opportunity to save on cooling costs.”

The experts added that there were “many production sites” in the country that could “easily be repurposed for Bitcoin mining.”

Most agree that the “lack of strict oversight by local regulators” creates “positive conditions for cryptocurrency-related activities.”

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