Russia has now reportedly become the second-largest country in the world in terms of Bitcoin (BTC) and cryptocurrency mining, with the United States maintaining its position as the leader. Nevertheless, the lack of clear regulations regarding cryptocurrencies in the United States may lead to a potential market distribution shift.
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According to Kommersant, BitRiver, a company that provides colocation services for cryptocurrency mining operations said that in the first quarter of the year, the Russian Federation achieved a new milestone by taking the second position globally in terms of mining power, with 1 gigawatt (GW) of power involved.
The mining capacity of 3-4 GW in the United States keeps it at the forefront, followed by other countries in the top 10 list such as Gulf countries with 700 megawatts (MW), Canada with 400 MW, Malaysia with 300 MW, Argentina with 135 MW, Iceland with 120 MW, Paraguay with 100-125 MW, Kazakhstan with 100 MW and Ireland with 90 MW.
At the end of 2021, Russia was previously ranked third in cryptocurrency mining surpassing both the United States and Kazakhstan in terms of bitcoin mining capacity, according to data from The Cambridge Center for Alternative Finance’s report. In January 2022, the country ranked fifth.
Bitcoin mining is the process by which Bitcoin transactions are validated digitally on the Bitcoin network and added to the blockchain ledger. It is done by solving complex cryptographic hash puzzles to verify blocks of transactions that are updated on the decentralized blockchain ledger.
Experts at BitRiver attribute the positive trend in mining capacity to the restrictions imposed on mining activities in Kazakhstan and, earlier, in China due to electricity shortages. On February 6, 2023, President Kassym-Jomart Tokayev signed a law on digital assets that regulates cryptocurrency mining in Kazakhstan. The main part of the law will enter into force on April 1, 2023.
According to the report, the new legislation will provide a sense of security for mining industry players to plan their operational and financial activities, execute major projects, draw investments, and advance related sectors of the Russian economy, specifically the electric power and information technology industries.