The year 2022 hasn’t been positive for the crypto market. Many crypto companies, investors, and miners lost a lot of funds leading to a loss of confidence in the market. At a point, miners’ rigs couldn’t sustain their collateral value, causing panic amongst them.
But then there have been some price hikes which, of course, didn’t last too long. There have also been some pullbacks making things more discouraging. That’s why some mining companies such as Japan SBI Holdings cite the crypto bear market as part of the causes of its decision to quit Russia.
According to a spokesperson, the raging war between Ukraine and Russia has also pushed the decision. As a result, the company will stop mining operations in Siberia, Russian, for now. Unfortunately, the two forces haven’t made things easy for the company as they’ve been on the losing end since the bear market and war erupted.
A news outlet also reported that the Chief Financial Officer of SBI Holdings, Hideyuki Katsuchi, announced that the mining machinery would be sold. But the company hasn’t disclosed the set time to complete their withdrawal.
SBI Holdings had previously decided to suspend operations in Serbia in February as the war started. With these pullouts, the company won’t have any other mining rigs in Russia. But its bank will keep working in Moscow without disruptions. Data shows that the pullout resulted in a pretax loss of $72 million and $17.5 million in the three months ending June 30.
Russia Loses Crypto Mining Hold
The war has caused the crypto mining hub a setback in its plans to expand operations within its shores. The USA Treasury Department first sanctioned BitRiver, the top bitcoin mining company operating in Russia.
Crypto market stands in the bear circle | Source: Crypto Total Market Cap on TradingView.com
But even with the sanction, BitRiver launched a mining project with Gazpromneft, a leading player in Russian oil. But another crypto miner, Compass Mining, closed its operation in Siberia with an offer of $30 million liquidation.
Before now, Russia has been the go-to destination for mining operations. This is because the energy cost in the country was low, and as soon China clamped down on miners, Russia became the next best thing. Due to the rush, mining took over 2% of total energy consumption in the country.
But President Putin didn’t mind, as he had plans to increase mining activities within Russia. According to him, mining will provide an avenue to utilize surplus electricity in the country and put its well-trained personnel to work.
To make things even more comfortable, the lawmakers approved a bill draft allowing VAT exemption to information systems operators and digital assets issuers.
With all these in place, Russia could have become the next hub for miners. But now, the war seems to be changing the plans for the country.
Featured image from Pexels, chart from TradingView.com