- SBI Holdings (+0.25%), Japan’s biggest online brokerage, said it will shut crypto-mining operations in Russia, adding to the churn in the region sparked by the threat of U.S. sanctions.
- Russia’s invasion of Ukraine has created uncertainty over the prospects of the mining business, while crypto’s global market rout has rendered it less profitable to mine tokens.
After China’s crypto mining ban last May, miners have flocked to Russia, in part to take advantage of low-cost power from natural gas and hydropower dams that have made it a popular destination besides North America.
However, Russia’s invasion of Ukraine has created uncertainty over the prospects of the mining business, while crypto’s global market rout has rendered it less profitable to mine tokens.
In April, the U.S. Treasury Department imposed sanctions on BitRiver, a Switzerland-based crypto mining company, targeting one of the industry’s largest data-center service providers, over its operations in Russia. Shortly after, America’s Compass Mining sought to liquidate US$30 million in hardware in Siberia to avoid sanctions.
Prior to the Russian invasion of Ukraine, the former was a favored destination for cryptocurrency miners, lured by the promise of cheap electricity and a relatively permissive attitude by Moscow, with respect to the industry.
Most recently, SBI Holdings (+0.25%), Japan’s biggest online brokerage that has been quicker than most Japanese financial firms in expanding into digital currencies, said it will shut crypto-mining operations in Russia, adding to the churn in the region sparked by the threat of U.S. sanctions.
Washington has long pointed to cryptocurrencies being used by Russia as a means to circumvent sanctions, and Moscow reports that as many as 1 in 5 Russians already owns cryptocurrencies.
SBI Holdings suspended crypto-mining in Siberia soon after the war began contributing to the company’s crypto asset business reporting a pretax loss of US$72 million in the three months ended June 30. SBI Holdings have yet to decide when it will complete the withdrawal of mining operations from Siberia, but as the war in Ukraine drags on, the pressure to pull out will increase.
In an April report, the International Monetary Fund warned that crypto mining may offer Russia a way around sweeping economic sanctions imposed by the U.S. and its allies, by allowing Moscow to leverage its energy resources to power mining, while generating revenue directly from transaction fees.
