Russian government gives green light to crypto mining operation in Siberia

The Russian government announced on Feb. 8 that it would start providing direct financial support to a cryptocurrency mining operation set to launch in Siberia later this year. 

According to Russian media, The Bitriver-B company will manage and operate the facility with 30,000 crypto-mining machines. It will employ 100 workers and run on 100 megawatts taken from the region’s local power grid, per the Russian language RBC.

The $12 million crypto-mining center is set to open in East Siberia, with the direct backing of the local government. Located in Buryatia, a republic in East Siberia,  the new center is currently under construction but nearing completion. 

Located in the village of Mukhorshibir, It is reportedly being allowed to operate with zero taxes on the land and property, insurance premiums reduced to 7.6%, and a reduced income tax rate, per RBC. After connecting the facility to the unified national power grid, the electricity tariff will be reduced by about half, officials say. 

The government lead on the project is the state-owned Corporation for the Development of the Far East. 

The news comes as sanctions continue to rain down on Russia following its invasion of Ukraine, as well as Russia’s announced completion of its pilot CBDC program, which it began testing last year.

It also comes after a tenuous 2022 for the crypto mining industry writ large — particularly amid outright moratoriums in Canada and the United States — the industry looked battered heading into 2023.

Add to that a recent disclosure by BlockFi, the bankrupt crypto lending platform, who recently announced they were forced to take a two-thirds loss on their $21 million loan to Bitcoin mining company BitFarm, coupled with the rising cost of energy due to the Russia/Ukraine war, 2022 was a very difficult year for those in the mining business.

But like a phoenix rising from the ashes, Bitcoin recently hit a new all-time high in hashrate, one of the best indicators of strength for the Bitcoin mining network. 

Now with the Russian government doubling down on building a  $12 million USD mining facility deep in the throes of the Siberian tundra, it appears that the mining industry has a clear path forward in Russia, all the while remaining banned in countries like China.