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After the United States, Russia has advanced to become the second-largest Bitcoin mining country in the world. Will it close the distance to the leader?
When it comes to the total hash rate of the Bitcoin network, China used to be the top location for cryptocurrency mining. However, the global landscape of cryptocurrency mining has changed since the government virtually outlawed the business in 2021, closing some of the largest operations in the globe.
On the one hand, new mining hotspots have appeared, such as Kazakhstan. On the other hand, American miners have increased their capacity to match demand, enabling the nation to seize the lead.
However, things are shifting quickly, and it’s possible that the USA won’t be able to stay ahead.
Russia’s mining capacity reportedly hit 1 gigawatt in January–March 2023, vaulting it into second position for the first time, according to BitRiver, a Russian technology company that runs hydroelectric-powered cryptocurrency mining operations.
Igor Runets, CEO of BitRiver, stated in remarks obtained by Kommersant that Russia’s rise in the rankings coincides with the US mining industry’s slowdown due to rising power costs and the elimination 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 the process of bankruptcy or have already gone bankrupt,” he added.
Overall, the tax and regulatory environment that US crypto miners are forced to operate in has lately gotten noticeably less friendly.
from provisions that allow Montana’s requisite large-scale computer facilities to pay a lower tax rate. For instance, support for extra taxes that target crypto miners has recently shifted.
For instance, the Treasury Department has suggested a 30% excise tax in President Biden’s 2023 budget. The cost of powering cryptocurrency mining operations is subject to the tax. According to the suggestions, mining firms would also have to disclose how much power they consume and the sources of that energy.
The expansion of digital asset mining, according to the Treasury Department’s “Greenbook,” has a detrimental effect on the environment. It may also drive up energy costs. The action makes it apparent that the tax’s purpose is to limit the expansion of cryptocurrency mining. The study goes on to say that an excise tax on the power consumed by miners of digital assets might lessen mining activity as well as its related negative effects on the environment and other damages.
Tax increases are being considered by federal lawmakers as a way to control the industry. While some jurisdictions have employed a more overt strategy to halt cryptocurrency mining.
North Carolina’s Buncombe County is going to put a one-year ban on any mining operations. This is done to allow the city administration some time to revise its zoning regulations to make room for crypto-mining operations. which, according to it, might have a bad impact on communities.
A measure has been presented by the Texas Senate in the interim. The legislation will control how Bitcoin miners use the public power infrastructure and how their profits are taxed.
U.S. local, state, and federal governments are taking action to control cryptocurrency mining. Russia may further shrink the gap between the two top Bitcoin miners in the world, according to recent trends.
According to recent reports, the Russian government would provide funding for a brand-new 100-megawatt mining facility in eastern Siberia.
The new cryptocurrency farm, which BitRiver is now constructing, will not be subject to land or property taxes and will enjoy a lower income tax rate. Additionally, 50% of the market price of power will be provided as a subsidy.
