Key Takeaways:
- U.S. Treasury issued sanctions against Russia’s bitcoin mining industry.
- Russia can use its energy resources to evade the sanctions.
U.S. Treasury Official States That Bitcoin Mining is Helping “Russia Monetize its Natural Resources”
Russia’s invasion of Ukraine is entering its third stage and has already taken a toll on the overall condition of the latter. The U.S. Department of Treasury is now issuing sanctions against the mining industry of Russia.
Data from Cambridge University reveals that Russia is in third place for Bitcoin mining and it is a big asset for the country. The mining companies are helping the country monetize their natural resources by utilizing “vast server farms”, and it is the last thing that the world needs now.
Time and again, income from cryptocurrencies has been seen as a threat by regulators as they can fund illicit activities and the same is happening in Russia. It already has an advantage in crypto mining because of its cold climate and vast natural resources, as said by Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence of the United States.
Sanctions have been issued against companies like BitRiver, which operates the mining farms using hydroelectric power. However, mostly these companies use fiat payments or “imported computer equipment” which is making them vulnerable to more sanctions.
Although, IMF has also stated that the monetization of these energy resources occurs outside the boundaries of the sanctions like “directly on blockchains”. The former has also said that the revenue generated from mining in the sanctioned countries is ” relatively contained” as these sanctions have diminished the scale of mining to some extent.
Though these sanctions have the potential to reduce the threats caused by Bitcoin mining, a major concern remains. Russia can use similar tactics as Iran to circumvent these sanctions.
