Russian Bitcoin Mining Firm BitRiver Becomes The First Crypto Firm To Be Sanctioned By US Treasury

Photo by Photographersupreme on Pixabay

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Bitcoin Mining has become the latest industry to be embroiled in the Ukrainian and Russia conflict following the U.S treasuries move to sanction BitRiver.

The sanctions against BitRiver are not unique to their business, with the European Union and the U.S. imposing a series of tough sanctions on Russia since the nation invaded Ukraine in February. The sanctions, which are mainly targeting President Vladamir Putin and Russian oligarchs, are aimed at crippling the country’s economy and penalizing the president and his high-ranking officials. 

The move by the Treasury on Bitriver could end up creating potential for cryptocurrency self-mining and hosting colocation firms such as Mawson Infrastructure Group Inc. MIGI. Bitcoin miners that had their machines hosted in Bitriver’s data centers may shift to neighboring countries and overseas to regions where companies like Mawson operate.

Mawson recently partnered with Celsius Mining LLC and Foundry Digital LLC to have 112 MW of hosting contracts, bringing a total of 116 MW for hosting customers. The hosting deals place Mawson among the largest hosting colocation companies listed on The Nasdaq Stock Exchange just behind Riot Blockchain Inc. RIOT and Core Scientific Inc. CORZ.

Sanctions Imposed By The West

The U.K, U.S., and European Union (EU) imposed a ban on the export of dual-use goods — items with both civilian and military applications, such as vehicle parts. The same applies to goods and technology that aid Russia’s defense and security system.

Sanctions also were imposed on Putin's adult children, Russian Deputy Prime Minister Shoigu, Minister of Defense Grigorenko, Russian billionaire Roman Abramovich and approximately 350 members of the Russian Parliament who were in support of Russia’s recognition of Luhansk/Donetsk as sovereign states.

Russian banks Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB), VTB Bank were excluded from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network: 

Latest U.S. Government Sanctions

While the Russian government is trying to find ways to maneuver its way out of the sanctions, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) launched sanctions on BitRiver, one of the largest Bitcoin mining firms in Europe and Asia. The sanctions block Bitriver and its subsidiaries from accessing crypto mining equipment and exchanges from the U.S.

This is the first time the Treasury Department has imposed sanctions on a virtual currency mining firm. According to a Treasury Department statement, by operating in Russia’s vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources.

The statement says the Treasury sanctioned Switzerland-based Bitriver AG because it still operates out of three offices based in Russia — despite shifting legal ownership of its assets to a Swiss holding company in 2021. Additionally, Treasury designated 10 Russia-based subsidiaries of Bitriver AG.

Potential For Installed Bitcoin Miners?

Bitriver claims it is the world’s largest hosting provider for green cryptocurrency mining after opening a 100-megawatt (MW) data center in Bratsk, Siberia, aimed at foreign Bitcoin miners from the U.S., Europe and Japan who want to leverage the region’s cheap electricity.

The sanctions make it illegal for U.S. citizens and U.S. exchanges to buy new cryptocurrencies mined by Bitriver, according to William Callahan, director of government and strategic affairs at Blockchain Intelligence Group. Callahan advises financial institutions and cryptocurrency exchanges not to transact with the Russian cryptocurrency ecosystem to avoid violating OFAC sanctions. This move could cripple Russia's Bitcoin mining industry.

Russia is the third-largest owner of Bitcoin hashrate, and the latest sanctions could interfere with the country’s cryptocurrency mining industry. Nick Hughes-Jones, Mawson’s chief commercial officer, believes that Mawson could further expand its market share if Russia’s hashrate goes down. “Russia is 12% of the global hashrate. If they went offline, then that’s huge for us,” Jones said.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.