Russian Bitcoin (BTC) miners are reported to be operating as usual despite the government’s invasion of Ukraine this week.
Miners in Russia accounted for about 11.2% of the global bitcoin hash rate in August 2021, according to the Cambridge Bitcoin Electricity Consumption Index. Given the sanctions imposed on the Russian government by the United States and NATO allies, it is unclear how this will affect the domestic bitcoin sector and the wider market.
While some crypto miners such as Ethereum specialist Flexpool have stopped services in Russia in response to the invasion, the BTC mining company Compass Mining for customers based in Russia has confirmed that the mining infrastructure will continue to operate in the region.
Compass Mining chief White Gibbs expressed his thoughts and prayers to all affected by the conflict in a tweet earlier today, assuring the community that the company’s mining operations in Eastern Europe are safely located in Serbia, free from any “geopolitical unrest”.
On Thursday, the Biden administration said it would impose “comprehensive economic sanctions and strict export controls” on Russia’s leading financial institutions, government, top officials and the technology sector.
It is noteworthy that the strict restrictions will not yet be applied to the international payment network SWIFT or transfers in cryptocurrency. Many observers argue that this may be the heyday of the Russian crypto-sector, as it may soon become an important tool for circumventing various sanctions.
In a newsletter to investors earlier today, co-founder of BTC Bull and Morgan Creek Digital Anthony Pompliano stressed that the Russian government could use this moment as an opportunity to leave the US dollar reserve system and support a decentralized currency with global appeal:
“This game theory leads us to Bitcoin. The second best option for being a producer and distributor of global reserve currencies is to be the most advanced user and owner of the global reserve currency that is not controlled by any country.”
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“This stimulus leads these superpowers to realize that bitcoin will be crucial in the coming decades. Countries with a large stake, along with mining and other activities that support bitcoin in their countries, will benefit greatly,” he added.
Matthew Siegel, head of digital asset research at VanEck, reiterated Bloomberg’s sentiment, noting that the Bitcoin network would allow Russia to reduce the potential damage caused by the closure of the Western financial system:
“Neither dictators nor human rights activists will face any form of censorship on the Bitcoin network.”
