Russian power was added to the miners – Newspaper Kommersant No. 16 (7461) dated 01/30/2023

The total capacity of Russian mining companies in 2022 exceeded 500 MW. Against the background of the fall of the cryptocurrency market, such dynamics was facilitated by a decrease in the cost of equipment and the interest of internal customers. The beginning of 2023 sets up segment participants for continued growth against the backdrop of a recovery in the cryptocurrency market. However, it can be limited by the introduction of special tariffs for electricity and taxation of mining.

The total capacity of mining sites in Russia at the end of 2022 exceeded 500 MW, follows from a survey of leading market participants. The leader is BitRiver, whose total capacity at eight sites exceeded 300 MW. According to the website of the Ural Mining Company (UMC), its total computing power is 88 MW. BitCluster owns three 60 MW sites. EMCD operates 50 MW data centers in four regions. BWCUG has up to 20 MW at one site.

However, the dynamics of the players differed. So, BitRiver doubled the number of data centers and the amount of available power. As Igor Runets, the founder of BitRiver, explained (see interview), the company implemented several large projects in Russian regions, including against the backdrop of “a low market in the second half of the year”, when equipment for customers “was available at a price close to cost”.

However, for example, BWCUG has reduced capacity. The company says that new European and North American clients are “reluctant” to be placed on Russian sites even at a lower cost. They also note “the foggy prospects for mining in the legislative sphere” and the need to find additional financial schemes for work, “which may not be relevant.”

EMCD Marketing Director Alisa Tsukanova notes that the profitability of the business may decrease if the authorities introduce special tariffs for electricity, as well as a separate taxation for miners.

In November 2022, the bill on mining was submitted to the State Duma, but has not yet reached the first reading. The form of taxation within the framework of the law is still being discussed. Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, said in an interview with Izvestia that either an analogue of a single tax on imputed income, where the rate varies between 7.5-15%, or a profit tax of 20% will be established for miners.

However, in the absence of clear legislation related to mining, including issues related to the sale of mined coins, taxation, etc., the market remains in the “gray zone”, the players admit. As a result, there are not even adequate estimates of the overall size of the market. “I think that a dozen large data centers in the Russian Federation are actually mainly engaged in mining. It is worth taking a closer look at any priority development areas and other special economic zones, most likely, mining farms are also located there, ”says Roman Nekrasov, co-founder of the ENCRY Foundation.

Meanwhile, in the global market, interest in mining is beginning to recover. “The indicator signals on the HashRibbons resource indicate that there is growth potential in front of bitcoin, which means that the darkest times for miners are already behind,” Nikita Vassev, co-founder of 0xprocessing, believes. So, according to coinmarketcap.com, in 2022, the capitalization of the cryptocurrency market fell 2.75 times, below $800 billion, and the rates of bitcoin and ether almost tripled. But in less than January 2023, market capitalization grew by a third, exceeding $1 trillion, bitcoin added more than 40% in price, and ether — more than 30%. According to GlassNode, the price of bitcoin again turned out to be above the average break-even level of mining.

Ksenia Kulikova