Russia is quickly developing as a global crypto-mining hub, with a growing number of companies starting to mine the digital currency Ethereum. This is due to the low cost of electricity and the government’s favorable tax policies, but there are also other factors that are helping cement the country’s reputation as a crypto-mining hub.
Even as powerful cryptocurrencies like Bitcoin have become popular worldwide, governments around the world have been cracking down on them, trying to regulate their use. However, many members of the crypto community are pushing back, and are already preparing to move parts of their operations to Russia, where the government has shown less hostility towards new technologies.
Russia’s largest crypto currency and blockchain association is launching a project to attract global crypto currency miners to the country amid restrictions on crypto currency mining in China.
The Russian Association for Crypto-economics, Artificial Intelligence and Blockchain, or RACIB, has announced an initiative to move global computing resources for mining cryptocurrencies to the Russian Federation. More details on the project will be released at a later date, a spokesperson for RACIB told Cointelegraph.
To promote and implement the project, RACIB is working closely with Russian authorities and state-owned enterprises and forming a number of joint working groups with local state structures, the report said.
One such group is working on an eco-mining project to build mining farms and data centers powered by renewable energy. In addition to Russia’s abundant hydropower and nuclear power, the group wants to establish crypto-mining companies based on green energy sources such as wind farms.
RACIB is already working with some overseas partners on the project, including a consortium of major crypto mining companies in China. The report notes that the consortium’s companies own more than 25% of the global hash rate of the major cryptocurrencies.
According to the energy publication NS Energy, Russia is the fourth largest producer of electricity, after China, the US and India, with an annual energy production of more than 1,100 terawatt hours. According to the report, by 2021 Russia will establish more than 1,100 megawatts of new power plants through wind farms in regions such as the Rostov region, the Republic of Kalmykia, Adygea and the Stavropol region.
Likewise: The9 signs green bitcoin mining deal with Russian company BitRiver
The new initiative offers a new strategic opportunity for global cryptocurrency mining companies amid the flight of Chinese mining companies from the country, as local authorities have consistently cracked down on cryptocurrency mining activities and shut down major mining companies. According to the Cambridge Centre for Alternative Finance, China’s bitcoin hash rate had already fallen sharply before the crackdown, from 75.5% in September 2019 to 46% in April 2021. Over the same period, the share of cannabis has increased from 4% to almost 17% in the US and to about 8% in Russia and Kazakhstan.
Russia is not the only country offering its energy capabilities to Chinese miners to become a major player in the sector. Miami Mayor Francis Suarez publicly suggested in June that Chinese cryptocurrency mining companies should consider establishing data centers in the city, given the capitulation of mining companies in China.
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