development prospects and forecasts of experts

Favorable climatic conditions and a surplus of electricity in some areas make it possible to profitably mine cryptocurrency in Russia. However, despite this, it accounts for less than 5% of the world’s BTC hashrate.

Inexpensive electricity and a cold climate contribute to the development of industrial mining centers in Russia, especially in the Siberian regions, where winter is long and electricity is available.

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

Basically, large mining farms are located near powerful power plants, such as the Bratsk hydroelectric power station in the Irkutsk region, the Kirishi GRES in the Leningrad region or the Kalinin nuclear power plant in the Tver region.

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Data centers are also located in Moscow and the Moscow region, but the price of electricity on them reaches more than 6 rubles. per kWh, and even with such high tariffs, it is rare to find a free place to place 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 ASIC-miners are accepted 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.

But despite the suitable technical conditions for mining in many regions, according to experts interviewed by RBC-Crypto, now the industry is experiencing some stagnation.

Russia occupies 4.66% of the total global bitcoin hashrate, said BitCluster investment director Thomas Galovich. He recalled that six months ago Russia’s share was 11.23%.

“This is not a fall, but an increase in the global hashrate from 160 to 240 exahashes, where Russia remained at the same level, and the main growth falls on 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 capacities and focus more on the United States than on Russia due to the geopolitical situation and the instability of the situation.

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

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

“I cannot say that foreign investors have completely abandoned communication 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 is no change here – interest is clearly growing. The limiting factor is the difficulties with the order and import of equipment due to logistical problems, “said Nekrasov.

The current situation with mining in Russia is generally positive, said Michael Gerlis, CEO and founder of the largest EMCD mining pool in Eastern Europe. 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 miners expect the introduction of specific legislative measures that will allow them to work in Russia legally,” the expert said.

Speaking about the overall dynamics, Gerlis noted that the industry is developing rapidly. 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 taking advantage of the moment and buying equipment at reduced prices.

Despite the uncertainty, experts agree that the industry will develop

Russia’s share in bitcoin mining will definitely grow, Gerlis 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 non-export foreign exchange earnings at a relatively stable cost of equipment – although on thethe shortage of chips needed for production may be more likely to affect.

“For the growth of mining in the country, there is enough capacity: the surplus of electricity 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,” Gerlis predicted.

Nekrasov disagreed with him, who believes that it is difficult to predict anything now. It is necessary to monitor the mood of investors. Investors are waiting for regulatory clarity on how the industry will work after the entry into force of tax laws and mandatory registration of miners, “he says.

Large Russian investors are seriously interested in entering the industry, Galovich added. He said that major projects are 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 country’s energy resources 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,” the expert concluded.