The US government has added a cryptocurrency miner to its sanctions list for the first time. BitRiver was sanctioned on Wednesday (20th) and will not be able to operate in the US and do business with US companies.
According to the US Office of Foreign Assets (OFAC), the sanctions came about because BitRiver is based in Moscow. In this sense, the law is part of a series of measures imposed against the Russian government and its companies.
In addition, the International Monetary Fund (IMF) has issued warnings against the use of cryptocurrencies in Russia. According to a report on Tuesday (19), the country is at risk of using mining to escape sanctions already in place.
The target of the new sanctions were the bank TranskapitalBank and ten subsidiaries of BitRiver. The measure also affects the holding company that controls the mining company. Although based in Switzerland, the holding company is in practice considered to be owned by Russian controllers.
Russian mining faces sanctions
According to the University of Cambridge, Russia has 11.23% of the computing power (hash rate) of Bitcoin (BTC). This puts the country in third place behind Kazakhstan (18.1%) and the USA itself (35.4%).
Based on the data, OFAC said Russia has significant “comparative advantages” in terms of mining. The country has a huge territory, favorable climate and cheap and accessible energy.
However, mining companies rely on imported equipment and fiat currency payments. But the country had frozen its dollar reserves, denying government and corporations access to the currency.
This leaves miners vulnerable to sanctions, which the US has started to do. BitRiver was the first company in this market to be prevented from doing so by sanctions.
Brian E. Nelson, undersecretary for terrorism and financial intelligence, said the Treasury Department can and will prosecute any person or company that helps circumvent US sanctions.
War popularized cryptocurrencies
As CriptoFácil reported, the start of the war in Ukraine caused cryptocurrencies to gain strength among the Russians. According to the data, more than 17 million Russians own cryptocurrencies with assets worth nearly 16.5 trillion rubles ($214 billion).
Currently, this number accounts for about 12% of the total value of cryptocurrencies, which totals $1.9 trillion. In other words, a large part of Russian citizens are familiar with cryptocurrencies and are already heavily investing in this market.
That is why the US is attacking Russian mining companies directly. Joe Biden’s government claims that Vladimir Putin’s government mines cryptocurrencies and can then exchange them for rubles or dollars. To avoid sanctions, they can use decentralized platforms.
In fact, Putin said that cryptocurrency regulation “is in the spotlight,” and the related bill was passed in April. So maybe mining could be seen as an ace up the government’s sleeve to avoid economic sanctions.
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