Russia has become the world’s second largest bitcoin mining country following the USA. Will it overtake the US?
China was once the world’s preeminent cryptomining center, accounting for 65-75% of the total hashrate of the Bitcoin network. But since the government essentially banned mining in 2021 and shut down the world’s largest mining facilities, the global cryptomining scene has been transformed.
On the one hand, new mining hotspots like Kazakhstan have emerged. On the other hand, US miners have increased capacity to meet demand, helping the country claim the top spot.
However, things are changing fast and the USA may not be able to maintain its leading position.
Russia’s mining capacity reached 1 gigawatt in January-March 2023, ranking second for the first time, according to BitRiver, a Russian technology company that operates hydro-powered cryptocurrency mining facilities.
A Merchant In a commentary published by BitRiver, Igor Runets, CEO of BitRiver, said that Russia has moved up the rankings as the pace of mining in the United States is being slowed by rising electricity prices and the removal of tax incentives. “In addition, the vast majority of the equipment was purchased by American miners on credit, so many over-leveraged companies are in bankruptcy proceedings or have already gone bankrupt” he added.
US miners face higher taxes
Overall, the tax and regulatory environment in which US cryptominers find themselves has become quite oppressive.
In President Biden’s 2023 budget, for example, the Ministry of Finance proposed a 30% excise tax. The tax is levied on the cost of powering cryptomining facilities. Under the proposals, mining companies would also have to report how much electricity they use and what energy sources it comes from.
Published by the Ministry of Finance in March “Green Book” argues in his publication that the growth of digital asset mining has a negative environmental impact. It can also increase energy prices. The move makes it clear that the purpose of the tax is to curb the growth of cryptomining. The document adds that “an excise tax on electricity used by digital asset miners may reduce mining activity, along with related environmental impacts and other damages”.
Federal lawmakers say the tax hikes will slow the industry’s growth, while some states believe they will shut down cryptomining.
Buncombe County, North Carolina will place a one-year moratorium on all mining activities. This is to give local government time to rewrite their zoning guidelines to accommodate crypto mining facilities. Which, according to him, carries the risk of negatively affecting communities.
Meanwhile, the Texas Senate has introduced a bill that would regulate how bitcoin miners connect to the state’s power grid and how they are taxed on their earnings.
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