According to Bloomberg News, the US Treasury Department has imposed on the crypto mining firm BitRiver sanctions, thereby targeting one of the biggest service providers of data centers related to its Russian operations. This is the first time such an action has been taken.
The firm, based in Switzerland, extends services in energy, mining facilities, and management solutions on a large scale to the Bitcoin miners across the globe, including Russia and Eastern Europe. These regions have been a few of the most popular for miners aside from North America, that we’re compelled to come out of China since there has been a crypto mining ban since last May.
This action of the Treasury comes on close heels just a day after there was a warning from the International Monetary Fund which said that nations like Iran and Russia could bypass sanctions by utilizing the natural resources which they are not being able to export by channeling them towards intensive mining operations which also includes mining Bitcoin.
Treasury expressed concern about the same on Wednesday, revealing in a news release stating restrictions on BitRiver, and 10 of its subsidiaries based in Russia, as the ongoing Ukrainian war enters the third month.
Last year mining Bitcoin generated revenue of an average of approximately $1.4 billion per month, out of which 11% must have been drawn by the Russian miners, as per IMF, reports Bloomberg News.
BitRiver had not responded when it was requested for comment by Bloomberg.
What is the broader impact of the action?
The BitRiver sanctions could, according to the chief marketing officer, BWC, a Hamburg-based data center operator related to crypto miners, Roman Zabuga said could cause an impact beyond just the crypto mining industry in Russia. It can lead to the reduction and redistribution of the computing power for Bitcoin across the world.
If there is a disruption in the sanctioned businesses in computing power, it will leave little option for the miners to resort to for hosting their operations. The mining facilities that are the nearest include Kazakhstan, which has its issues to deal with. In contrast, Canada and United States do not have data centers that are readily available, and Zabuga says that it is expensive in Europe.
Bloomberg News reports that those miners that are not engaged with BitRiver enjoy more chances of earning from Bitcoin by using the same computing input or hash rate. This is because the difficulty in Bitcoin mining would decrease if there is less competition from the miner clients of BitRiver. This could also lead to what happened following a ban on crypto mining by Beijing last May, which led to an abrupt drop in computing power globally and a windfall of multibillion-dollar for the North American miners.
