Russia Climbs to the Global Second Spot in Cryptocurrency Mining

In the rapidly evolving landscape of cryptocurrency mining, Russia has risen to become the second-largest country in the world for Bitcoin mining, while the United States continues to hold the top position. However, the lack of comprehensive regulations surrounding cryptocurrencies in the US might lead to a shift in market dynamics.

Recent reports from BitRiver, a company specializing in providing colocation services for cryptocurrency mining operations, indicate that Russia now ranks second globally in terms of mining power, with 1 gigawatt (GW) of power contributing to the process. This development has been fueled by a combination of factors, including mining restrictions in other countries and a more favorable regulatory environment in Russia.

The United States remains the global leader in cryptocurrency mining with a capacity of 3-4 GW. The top 10 list of countries in this domain includes Gulf countries at 700 megawatts (MW), Canada with 400 MW, Malaysia at 300 MW, Argentina with 135 MW, Iceland at 120 MW, Paraguay between 100-125 MW, Kazakhstan with 100 MW, and Ireland holding 90 MW.

At the close of 2021, Russia ranked third in the realm of cryptocurrency mining, surpassing both the United States and Kazakhstan in Bitcoin mining capacity, based on data from The Cambridge Center for Alternative Finance. However, by January 2022, Russia’s ranking had dropped to fifth place.

Bitcoin mining serves as the backbone of the Bitcoin network, as it validates transactions and adds them to the blockchain ledger. This process requires solving complex cryptographic puzzles to verify transaction blocks, which are then updated on the decentralized blockchain ledger.

According to experts at BitRiver, the growth in Russia’s mining capacity can be partly attributed to mining restrictions in countries such as Kazakhstan and China, which have experienced electricity shortages. In response, Kazakhstan’s President Kassym-Jomart Tokayev signed a law on digital assets on February 6, 2023, which regulates cryptocurrency mining in the country. The majority of this law will come into effect on April 1, 2023.

The introduction of new legislation in Russia is expected to provide a sense of security for players in the mining industry, allowing them to plan and execute their operations, attract investments, and contribute to the growth of related sectors within the Russian economy, particularly the electric power and information technology industries. As the global cryptocurrency mining landscape continues to evolve, Russia’s rise in the rankings demonstrates the potential for further growth and innovation in this burgeoning industry.