Russia Rises To 2nd Place In Bitcoin Mining Usage, US Still Leads

Key Points:

• Russia is now second in the world for Bitcoin mining electricity usage with 1 GW, following the US with 3-4 GW.
• Electricity prices, reduced mining profitability, and the loss of tax incentives hinder American market development.
• Foreign policy risks are increasing for Russian miners due to Western sanctions against Russian companies, including those that work with them.

According to a report by Kommersant, in the first quarter of this year, Russia became the second-largest country in the world in terms of the amount of electricity used for Bitcoin mining.

The Russian Federation used 1 GW of power for mining, surpassing the Gulf countries with 700 MW, Canada with 400 MW, Malaysia with 300 MW, and other countries. However, the United States remains the global leader with 3-4 GW of mining capacity.

Experts from BitRiver said that this positive trend is due to a reduction in mining activities in Kazakhstan and China due to a shortage of electricity. Kazakhstan introduced licensing for mining activities and measures to protect its energy system from unregulated mining at the end of 2022.

BitRiver CEO Igor Runets explained that rising electricity prices, reduced mining profitability, and the abolition of tax incentives slow down the development of the American market. Many US miners purchased their equipment on credit, leading to over-leveraged companies that are now in the process of bankruptcy or have already gone bankrupt.

On the other hand, foreign policy risks facing Russian miners are increasing. The West has imposed sanctions against Russian companies, including secondary sanctions against banks, exchanges, mining pools, and other foreign players working with Russian miners.

This report highlights the dynamics and challenges of the Bitcoin mining industry globally. While Russia and other countries are ramping up their mining activities, the US market faces difficulties due to rising costs and decreased profitability. It also underscores the importance of regulations, licensing, and measures to protect energy systems from unregulated mining, as seen in Kazakhstan.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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