US sanctions crypto miner BitRiver for Russian operationsVish Gainon April 21, 2022 at 08:09 Silicon RepublicSilicon Republic

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The US treasury department has announced sanctions yesterday (20 April) on crypto mining company BitRiver for its involvement in evading sanctions placed by the US and its international allies on Russia since the invasion of Ukraine.

BitRiver, which provides crypto mining services to miners across the globe, was founded in 2017 in Russia, where it operates out of three offices. The company moved its head office to Switzerland last year but still has extensive operations in Russia, regarded as the world’s third largest crypto mining market.

The company was part of a long list of Russian individuals and entities sanctioned by the treasury, including commercial bank Transkapitalbank and a global network of individuals led by oligarch Konstantin Malofeyev.

“Treasury can and will target those who evade, attempt to evade, or aid the evasion of US sanctions against Russia, as they are helping support Putin’s brutal war of choice,” said Brian E. Nelson, undersecretary for terrorism and financial intelligence.

“The US will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion.”

By operating vast server farms for global crytpo miners, companies such as BitRiver are helping Russia monetise its natural resources, according to the treasury. While Russia’s cold climate and vast energy resources make it an ideal location for crypto mining, mining companies’ reliance on imports of computer equipment and fiat payments “makes them vulnerable” to sanctions.

Implications

The sanctions could have serious implications on the bitcoin mining capacity of the world. If successful, it will limit the ability of BitRiver and its global clients to mine bitcoin in the key region, disrupting the global supply.

Roman Zabuga, chief marketing officer at BWC, a crypto mining data centre operator based in Hamburg, told Bloomberg that the sanctions could have an impact far beyond the Russian crypto mining industry – potentially redistributing and reducing the computing power for Bitcoin mining across the globe.

After China’s ban on crypto mining last year, many miners would have moved their business to Russia and other parts of Eastern Europe because of the lower cost when compared to Europe or North America. Now, with the invasion of Ukraine and sanctions on Russia, this region’s stability hangs in the balance.

Even before the sanctions and the war, however, Russia’s central bank had been considering a China-like ban on crypto mining in the country amid fears that it could compromise financial stability.

Last week, US citizen Virgil Griffith, a crypto expert who worked for the Ethereum Foundation, was jailed for more than five years in the US for helping North Korea evade sanctions using blockchain technology.

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