How was the year for cryptocurrencies and mining in Russia?

The year 2023 began for the Russian crypto industry with the expectation of the introduction of cryptocurrencies into the legal field. In December 2022, during the forum “Cryptocurrencies, Mining and Digital Assets,” the head of the Duma Committee on the Financial Market, Anatoly Aksakov, announced that digital currencies could be introduced into the legal field as early as January. The deputy emphasized that cryptocurrency “as a legal product will definitely appear in our country next year, there will definitely be legislation.” However, as a result, the authorities’ focus shifted to the digital ruble, writes RBC Crypto.

Digital ruble

The bill amending various legislative acts in connection with the introduction of the digital ruble was adopted in the first reading on March 16, amendments were adopted until May 19. And, according to the legislators themselves, the document received “a lot of criticism,” so it required major improvements.

In this regard, the timing of the adoption of the bill on the digital ruble was shifted. Following them, the launch of pilot testing of a new form of national currency was postponed. As a result, it was possible to begin testing operations with real digital rubles only on August 15. The pilot program is expected to expand in 2024, with mass implementation planned for 2025.

During the fall, Russians carried out almost 14 thousand transactions with digital rubles in 11 Russian cities in the amount of 919 thousand rubles. In total, 497 wallets were opened during the pilot, and the number of transactions exceeded 13.7 thousand. Currently, 13 banks are participating in the experiment, and next year their number will increase to 30.

Next year, all Russians will be able to try to open a digital wallet for payment in digital rubles, assured the head of the Ministry of Finance Anton Siluanov. And the Ministry of Finance and the Central Bank will test the use of the digital ruble for a number of budget expenses.

In addition to the digital ruble, one of the main topics of the outgoing year was mining. The industry never entered the legal field, but this did not stop it from showing multiple growth.

Mining

At the end of 2022, the total capacity of the largest Russian mining companies exceeded 500 MW. However, it is important to note that there are currently no adequate estimates of the overall market size. Basically, computing power is calculated taking into account companies’ own data.

In 2023, Russia continued to even more actively increase computing power in the mining industry.

If in 2022 the country was one of the three largest countries in terms of the amount of computing power involved in crypto mining, then according to the results of January-March 2023, the country took second place in the world. The positive dynamics were due to the fact that last year one of the leaders in the cryptocurrency mining industry, Kazakhstan, limited it, following the example of China. Therefore, many were forced to change jurisdiction to a more favorable one, which turned out to be Russia.

According to Russian mining company BitRiver, from January to December 2023, the amount of power used in mining increased from 800 MW to 1,700 MW. BitRiver alone has 15 operating data centers with a total capacity of over 533 MW, located in 9 regions of Russia.

During the year, at various venues, including the St. Petersburg International Economic Forum (SPIEF), discussions were held between representatives of the mining industry and government authorities, including with the participation of Deputy Minister of Energy Pavel Snikkars and Deputy Minister of Finance Ivan Chebeskov, as well as deputies of the State Duma.

One of the results of this active work was the formation of the Association of Industrial Miners, which included the largest industry participants. The organization was created with the goal of introducing the industrial mining industry into the legal field and establishing transparent, balanced regulation of the industry, establishing industrial OKVED for mining activities and creating a favorable environment for investors and customers, said its director Sergei Bezdelov.

And if the sanctions failed to affect the mining industry, they directly affected the work of the largest crypto exchange Binance.

Binance's departure from Russia

In the fall, Binance, the largest cryptocurrency exchange by trading volume, entered into an agreement to sell its entire Russian business. Users were encouraged to switch to the CommEX platform, which announced its opening a day before Binance officially announced its departure from the country.

The company promised to close all exchange services and other business areas in Russia within a few months. However, this decision was not unexpected. For example, on August 27, Binance prohibited clients from Russia from transactions with any currency other than the ruble through its own p2p platform. She also announced a new ban – from the end of January 2024, the ruble itself will be unavailable on Binance P2P.

Binance began complying with sanctions against Russia back in 2022, when it came to limiting a user’s account to 10 thousand euros. However, the move to completely leave the country created a great stir.

Then the exchange itself found itself out of favor with the American government. The US Commodity Futures Trading Commission (CFTC) and the US Department of Justice conducted an investigation into the site, which led to a multi-billion dollar fine and the resignation of its founder Changpeng Zhao from the post of head of the company (he is now under investigation and cannot leave the US until the investigation is completed).