How the sanctions affected Russian miners and what the market expects next

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On February 24, Russian President Vladimir Putin announced the start of a military operation in Ukraine. In response to Russia’s actions, the Ukrainian authorities imposed martial law, while the US and the EU imposed new restrictions on various areas of the Russian economy.

Geopolitical tensions have also affected the crypto business, writes RBC Crypto. Particularly in mining. Mining companies have felt a sharp decrease in applications from potential foreign investors, including Asian ones, said Roman Nekrasov, co-founder of the ENCRY Foundation.

“Investors already in January were frightened by the harsh rhetoric of the Russian Central Bank and individual legislators about mining. In February, fear of the economic consequences of sanctions was added to regulatory concerns. Everyone is waiting for some certainty and resolution of the situation in the least stressful way for the industry,” Nekrasov said.

On January 20, the Bank of Russia released a report for public discussions, in which it proposed to introduce a ban on the issuance, circulation and exchange of cryptocurrencies in Russia, as well as the organization of these operations. The regulator also considers it necessary to ban the mining of digital assets and start monitoring Russian investments in cryptocurrency on foreign trading platforms.

At the end of January, Deputy Prime Minister Dmitry Chernyshenko approved a roadmap that proposes the regulation of cryptocurrencies, not their ban, identification of customers, responsibility for the illegal circulation of digital assets, as well as the development of a methodology for assessing the value of cryptocurrencies. Representatives of the Ministry of Finance, the Ministry of Economic Development, the Prosecutor General’s Office, Rosfinmonitoring, the Federal Security Service, the Ministry of Internal Affairs, the Federal Tax Service, the Ministry of Digital Development and the Bank of Russia took part in the development of the roadmap.

Russian Finance Minister Anton Siluanov is sure that mining should not be banned, it should be introduced into the legal field. On February 18, the agency submitted a bill to the government to regulate cryptocurrencies. At the same time, the Bank of Russia presented its bill on the same day. The document provides for a ban on the organization of the issuance of cryptocurrency and its circulation, as well as on the dissemination of information about it. The project also prohibits banks and other financial market participants from owning private digital currencies.

In addition to regulatory uncertainties, disruptions in the supply of new computing equipment could become a negative factor for miners, the co-founder of the ENCRY Foundation added. He explained that this was not so much due to the direct implementation of sanctions, since the equipment is supplied from Asian countries, but to logistics.

“The supply chain is broken. And here it doesn’t matter what they bring – components for mining farms, diapers or raw materials for the production of medicines. This problem is less relevant for those who have already managed to update the production line and receive new or used equipment from China. Others are now hurriedly deciding what to do: someone had problems with delivery back in January due to unrest in Kazakhstan,” Nekrasov said.

The main problems due to sanctions are related to payment, added Sergey Arestov, co-founder of BitCluster. He explained that foreign clients cannot transfer money for services in foreign currency to their current account, as transfers to the Russian Federation are blocked.

“But mining in Russia has now become even more profitable, as the cost of electricity in terms of dollars has decreased due to the fall of the ruble. We continue to work and increase cooperation with customers from China,” Arestov said.

There is a slight panic among miners, especially those who are on foreign pools, said Dmitry Kudinov, head of the financial products department of the EMCD mining pool. He added that most miners are abandoning large exchanges in favor of hardware wallets in order to save their funds from possible blockages.

“Russian-speaking users will now be much closer to domestic pools and developments,” Dmitry Kudinov concluded.

On February 27, the Minister of Digital Transformation of Ukraine, Mikhail Fedorov, appealed to the largest crypto exchanges with a call to block all Russian users. Fedorov noted that it is important to impose restrictions not only on persons against whom sanctions were imposed, but also to block ordinary clients.

Crypto exchanges Binance and EXMO announced that they would not block all Russian users, but would block access to their trading platforms only to persons from the sanctions lists. At the same time, BTC-Alpha, KUNA, CEX IO and Qmall exchanges have imposed restrictions on Russians.

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Source: Cryptocurrency

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