Russia has emerged as the world’s third largest bitcoin miner, with its share of miners’ total computing power – known as the ‘hash rate’ – reaching 11.23%, data from Cambridge University published this week shows.
Russia’s share of bitcoin mining has grown by about 30% from last year’s figures. The United States continues to lead with 35.4%, and Kazakhstan is in second place with 18.1%. While the media embraced and reviewed the news that the United States had become the world’s leading mining hub, Russia’s rise went largely unnoticed.
Bitcoin miners were forced to spread around the world after China imposed a blanket ban on the crypto mining industry in late May amid a widespread crackdown on the use of cryptocurrencies in the country. Prior to that, China was the largest bitcoin mining hub, with 75% of bitcoins mined on its territory in 2019, and then dropped to about 50% in 2020 and 44% in May. After the ban went into effect, China’s hash rate fell to zero by July.
The relatively low energy costs in Russia and the cold climate in regions of the Far East appear to be attracting miners and allowing companies using surplus electricity to take advantage of the Bitcoin price hike earlier this year. However, concerns have been raised about illegal mining.
In a letter to the State Energy Ministry in late September, the governor of Russia’s Irkutsk region, Igor Kopsev, complained of “Avalanche-like growthEnergy tariffs, blame underground miners.
“Analysis of the situation indicates an avalanche-like increase in energy consumption from cryptocurrency mining in tariffs for the population, which was exacerbated by the ban on mining by the Chinese authorities and the transfer of a large amount of equipment to the state. Irkutsk region,The governor wrote in the letter obtained by the newspaper Vedomosti. He stated that the electricity consumption by the region’s residents in 2021 will exceed last year’s figure by 159%. The Russian Energy Ministry confirmed the problem of illegal mining centers.
Last year, Russian President Vladimir Putin signed a law allowing citizens to buy and sell cryptocurrency, moving the cryptocurrency market out of the so-called gray area in financial law. However, the law has not adopted cryptocurrency as legal tender, which prevents companies from accepting digital denominations at par with the ruble. The Russian Central Bank earlier this year warned people to stay away from dealing in cryptocurrencies, noting that it always involves risk, especially for unprepared investors.
The crypto market, which saw its asset values soar to unprecedented levels earlier this year, has since experienced a series of crashes that wiped out large sums of investments. Bitcoin price is now on the rise again, rising to its highest level since May at $60,000 per coin on Friday. However, experts warn that the surge could lead to another sell-off in the near future.
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