So far bitcoin mining in Russia remains unaffected but experts believe sanctions will soon be felt in the crypto industry. Disruptions are likely in Russia as it pursues military action in Ukraine. The United States, Russia, and Kazakhstan make up over half of the Bitcoin network’s computing power.
Will Foxley of Compass Mining says Russian bitcoin is powered by hydroelectric power in Siberia. He pointed out that it’s unlikely that hash power will go offline unless sanctions start to take a toll. Whit Gibbs, the CEO of Compass Mining, took to Twitter to highlight that the company’s facilities in Russia are very much isolated from the geographical unrest. Gibbs tweeted that Compass Mining confirmed with its partners that the miners are safe and will continue to operate as normal.
Analysts believe that if a large number of bitcoin miners happen to go offline suddenly as had been seen in China in mid-2021, the network would become less decentralized. It would also become less secure. But it’s not only bitcoin that will be hit, there are other cryptocurrencies too – like Ethereum and other blockchains.
Crypto mining has emerged as a multi-billionaire dollar industry with pools operating as a team sport. One such team, FlexPool said it would block people with Russian IP addresses from mining Ethereum. This group is known to provide over 5% of the hash power to the Ethereum network. It ranks fourth. In a statement, FlexPool apologized to fellow Russian miners and acknowledged that many do not support the war. It said that they are supporting their nation and without them, Russia cannot function. This is just an example of one group of miners taking a political stand.
In the past, the pools have been known to side with the government. This was seen in China, wherein Antpool – the largest bitcoin mining pool, cut off users in mainland China to be in line with Beijing’s blanket ban on crypto. However, experts don’t see Russia pulling the plug on its cryptocurrency sector any time soon. Moscow is focused on winning the war.