New Delhi: Sanctions were imposed on BitRiver, a crypto mining firm, by the US Treasury Department over its operations in Russia.
According to a report by Bloomberg, this is first ever action by the US against any private crypto company.
BitRiver, the Switzerland-based firm, offers energy sources, mining facilities, and large-scale management solutions to bitcoin miners across the world, including those in Eastern European and Russia.
Besides North America, such regions have been among one of the most popular destinations for crypto miners who were forced out of China due to a ban in crypto mining by Beijing in May last year.
The action by US Treasury department comes just a day after the International Monetary Fund (IMF) issued a warning on cryptocurrency mining. The IMF said that crypto mining could offer a pathway for countries, such as Russia and Iran, to bypass sanctions by putting natural resources they are unable to export toward energy-intensive mining operations, such as Bitcoin mining, according to the report.
According to the IMF, last year, Bitcoin mining generated an average of $1.4 billion in revenue per month, of which about 11 per cent might have gone to Russian miners.
In a news report, US Treasury on Wednesday echoed the same sentiment announcing curbs restrictions on BitRiver.
The US and west European countries have imposed sanctions on Russia as it invaded Ukraine.
The department said, “By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetise its natural resources. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions.”
Impact on trade
The sanctions on BitRiver could have a far-fetched impact. Roman Zabuga, chief marketing officer at Hamburg-based BWC, a data-center operator for crypto miners, said that the impact will be far beyond the crypto mining industry in Russia, by potentially redistributing and reducing the computing power for Bitcoin mining across the globe.
He said if the computing power from the sanctioned businesses is disrupted, it will leave fewer places for miners to turn to for hosting their operations. The nearest mining facilities are in Kazakhstan, which has its own issues, while the US and Canada do not have readily available data centers, while Europe is expensive.