SBI Holdings (the largest Japanese online brokerage) is closing down its Russian Federation crypto mining business. The financial company announced that it will sell the equipment to reduce uncertainty about the future of these investments in light of the conflict in Ukraine and the declines in mining profits.
Japan’s SBI Broker to Complete Withdrawal From Russian Mining Industry
When China clamped down on cryptocurrency mining in May 2021, Russia was a popular destination because of its low cost power and favorable climatic conditions. However, sanctions imposed over Moscow’s decision to attack Ukraine this year have hit bitcoin mining, among other Russian industries.
This spring, the U.S. Treasury Department targeted Bitriver, a Switzerland-based mining data center operator with a significant presence in Russia. Compass Mining of the United States sought $30 million worth of mining hardware in Siberia to get out of Western sanctions.
Russia’s invasion of Ukraine has created uncertainty over the prospects of the mining business in the energy-rich region, while the crypto market’s downturn has made it less profitable to mint digital currencies, a representative of SBI, the biggest online broker in Japan, told Bloomberg. Hideyuki Catsuchi, the chief financial officer of SBI revealed that the company intends to sell its equipment in order to withdraw from Russia.
SBI entered the digital asset space earlier than other Japanese financial firms, but this year’s negative developments have led to a pre-tax loss of 9.7 billion yen ($72 million) from its crypto business in the second quarter, when the group also registered a 2.4 billion yen net loss (over $15.8 million), a first in a decade.
Katsuchi stated that the Japanese brokerage had suspended mining operations in Siberia after the conflict in Ukraine. However, it has yet to determine when the withdrawal will be completed. According to the executive, although there is no crypto-related business, it plans on continuing its Moscow-based SBI Bank commercial bank unit. After U.S. diplomats in Tokyo reportedly asked authorities to force Japanese crypto-miners and exchanges into severing ties, the move is a result.
According to the International Monetary Fund, April saw a warning that crypto mining might offer Russia, Iran, and other sanctions countries, an opportunity for them to bypass economic and financial limitations imposed on the United States and their allies. They can also use their energy resources for mining and revenue generation from the sale of cryptocurrency and transaction fees.
According to a recent study, electricity consumption in Russia’s crypto mining sector has been constantly rising in the past few years, registering an almost 20-fold increase over the five-year period since 2017. Siberia’s Irkutsk, offering some of the lowest electricity rates in the country, is one of the most attractive regions for miners, alongside the capital Moscow where they can take advantage of well-developed energy and other infrastructure.
Are there any other Japanese firms that have stopped crypto mining in Russia? Please leave your comments below.
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