What are the prospects for mining in Russia. The experts gave a forecast

Inexpensive electricity and a cold climate encourage the development of industrial mining centers in Russia, especially in the Siberian regions where winters are long and electricity is available.

The cryptocurrency market in Russia has not yet fully formed due to the lack of a legislative framework, but despite this, large data centers are already operating in the country that mine cryptocurrencies on an industrial scale.

Basically, large mining farms are located near powerful power plants, such as the Bratskaya hydroelectric power station in the Irkutsk region, Kirishskaya state district power station in the Leningrad region, or the Kalinin nuclear power plant in the Tver region.

Data centers are also located in Moscow and the Moscow region, but the price of electricity for them reaches more than 6 rubles. per kWh, but even with such high tariffs, it is rare to find free space to accommodate equipment.

Many centers do not accept customers' equipment for placement at all, but offer their own for rent or leasing. In turn, the centers where they accept ASIC miners for placement take only new models, since old equipment will not generate income at such electricity tariffs as in the Central region of the country.

Russia now occupies 4.66% of the total global bitcoin hash rate, said Thomas Galovich, investment DIRECTOR at BitCluster. He recalled that six months ago Russia occupied 11.23%.

“This is not a drop, but an increase in the global hashrate from 160 exahash to 240 exahash, where Russia has remained at the same level, and the main growth comes from the United States,” Galovich emphasized.

He attributed this to the fact that after the ban on mining in CHINA, large players and investors are looking for new locations to place their capacities and are now focusing more on the United States than on Russia due to the geopolitical situation and the instability of the situation in Russia.

“Now the mining industry in Russia has paused: existing enterprises continue to operate in full, but investments from foreign investors have clearly declined. Thus, it is unlikely that Russia will increase its share in the bitcoin hashrate in the coming months and be able to overtake Kazakhstan in terms of mining volume in the world,” added Roman Nekrasov, co-founder of the ENCRY Foundation.

The expert explained that the current situation contrasts with the mood of investors in the fall and winter of 2021, when many considered Russia as one of the regions best suited for the relocation of mining enterprises due to the low cost of electricity and proximity to China, where the equipment was taken from.

“At the same time, I cannot say that foreign investors have completely refused to communicate with Russian miners: rather, they have taken a wait-and-see attitude. I believe that this state of affairs will continue for several more months. As for Russian investments, there are no changes here - interest is clearly growing. The limiting factor is the difficulties with ordering and importing equipment due to logistical problems,” Nekrasov said.

The current situation with mining in Russia is generally positive, said Michael Jerlis, CEO and founder of the largest mining pool in Eastern Europe EMCD. According to him, at the end of 2021, government agencies paid close attention to mining and began to work out a mechanism for regulating the industry.

“Now the miners are waiting for the implementation of specific legislative measures that will allow them to work legally in Russia,” the expert said.

Speaking about the overall dynamics, Jerlis noted that the industry is developing rapidly, as in recent years. Despite the current situation in the financial markets, as well as strong volatility, the mining industry feels great, since such moments are well suited for investing in the extraction of digital assets, the expert believes. According to him, investors are actively seizing the moment and buying equipment at reduced prices.

Despite some uncertainty, in general, experts agree that the industry will develop.

The share of Russia in bitcoin mining will definitely grow, Jerlis is sure. This is confirmed not only by statistics, but also by the number of potential new players interested in mining - venture funds, family offices, production owners and highnet investors. For them, this means export-free foreign exchange earnings with relatively stable equipment costs - although the latter may be affected by a shortage of chips needed for production.

“There is enough capacity for the growth of mining in the country: the electricity surplus in the country is 3 GW, and by the end of the year, the energy consumption of Bitcoin mining can grow to 1.5 GW,” Michael predicted.

Nekrasov did not agree with him, who believes that it is now difficult to predict anything.

“We have to wait and monitor the mood of investors. Investors are also waiting for regulatory clarity on how the industry will work after the entry into force of laws on taxation and mandatory registration of miners, ”says Roman. However, in general, the expert noted that, despite the difficulties with logistics and attracting investments from abroad, mining continues to develop in Russia.

Large Russian investors are seriously interested in entering the industry, Galovich added. He said that large projects are currently being developed that will be implemented in the next 2-3 years.

“This will give a strong impetus to the development of the industry in Russia. The energy resources of the country and the legislative regulation of the sector allow us to say that the investment cycle in Russia is just beginning. Therefore, the prospects are very good, ”concluded the expert.

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