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BitRiver is the first crypto miner to be sanctioned by the US, putting the world’s third-largest crypto mining market on shaky ground.
The US Treasury Department is sanctioning crypto mining company BitRiver for its role in the evasion of sanctions placed by the US and its international allies on Russia following the invasion of Ukraine.
BitRiver, which provides crypto mining services, was founded in 2017 in Russia and operates out of three offices in the country. The company moved legal ownership of its assets to Switzerland last year but still has extensive operations in Russia, which is 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 US Treasury yesterday (20 April), including commercial bank Transkapitalbank and a global network 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 crypto miners, companies such as BitRiver are helping Russia monetise its natural resources, according to the US 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.
“The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions,” the Treasury added.
Implications
The sanctions could have serious implications on global crypto mining capacity. If successful, they will limit the ability of BitRiver and its global clients to mine cryptocurrencies in the key region, disrupting the global supply.
Roman Zabuga, chief marketing officer at Hamburg-based crypto mining data centre operator BWC, 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. Now, with the invasion of Ukraine and sanctions on Russia, this region’s stability hangs in the balance.
Even before this conflict, 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 previously 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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