Russia to Build Siberian Power Plants as Crypto Mining Demand Rises

The Federation's efforts to legitimize crypto as a means of international trade have likely contributed to a rise in cryptocurrency mining. In addition, the Russian energy minister has acknowledged that new power plants in Siberia may be required to meet the increasing demand for electricity from the industry. Since its “special military operation” began in Ukraine, Russia has been the target of criticism at home and abroad. Banks in the country have been cut off from the SWIFT protocol, and international assets have been frozen because of EU and US sanctions.

Russian Energy Minister Nikolay Shulginov has acknowledged the increasing demand for electricity from cryptocurrency miners in some parts of Siberia. There have been reports in the regional press and crypto-centric media that Shulginov is aware of the need for additional power generation facilities to meet their requirements.

Russia has followed India's lead in regulating digital assets, with Moscow mulling over a digital Ruble while also addressing the energy needs of cryptocurrency miners. Because of Western sanctions, a once-resolutely anti-cryptocurrency sentiment has flipped, and the practice is now legal. Russia can use cryptocurrency for international trade because the West does not regulate it.

Despite a significant increase in mining revenue over the past year, the government is still not convinced that crypto should be legal tender. Conversely, Russia hopes to “boost foreign trade” with the help of crypto. When questioned, Shulginov made the following observations:

"The position of the Ministry of Energy has always been based on the need to create working conditions for mining."

The cryptocurrency market will be influenced by a rise in energy production solely to support crypto mining. In January 2022, for instance, the country accounted for 8.7 percent of the global Bitcoin hashrate. If more cryptocurrencies that can be mined entered the market, their prices would fall. This drop may be minimal, but it will still be felt, especially in major cryptocurrencies like Ethereum and Bitcoin, due to the Federation's perspective on crypto as a means to conduct and boost international trade. Furthermore, after the war's end in Ukraine and its consequences, Russia may be poised to become a hub of Web3 and DeFi due to the country's legalization and regulation of digital assets and increase in mining activity.