Russia Mined $3B Worth of Bitcoin Last Year Amid Western Sanctions, Director of Russia's Industrial Mining Association Reveals

Fred Thiel, CEO of Bitcoin miner Mara, is in the news today after he claimed that mining and BTC strategic reserves are national security interests.

Bitcoin (BTC) miner Mara’s CEO has highlighted Russia’s mining efforts and strategic reserves, sparking a discussion on cryptocurrency's role in national security.

Fred Thiel's remarks come after it was revealed that Russia mined $3 billion in BTC last year despite Western sanctions.

"Just shows that #bitcoin is a matter of national security, both bitcoin mining and strategic reserve. Russia mined over $3 billion in Bitcoin last year amid sanctions."

Russia mined $3 billion in Bitcoin last year - U.S vs Russia in the crypto space

According to Izvestia, the Russian outlet, the Industrial Mining Association's Director, Sergey Bezdelov, disclosed this information during a mining session on Wednesday. He also revealed that the government earned $555 million in taxes from BTC mining in 2023.

"In 2023, 54K Bitcoins were mined in Russia. According to our estimates, the annual increase in taxes is 50 billion rubles. Now there is a law on the correct “gentle” regulation. 50 billion – with today’s scenario conditions. And new investors will come."

While this figure is less than 1% of Russia's $2.27 trillion GDP (Gross Domestic Product), it indicates a significant tax revenue stream, especially given the country's economic struggles due to Western sanctions.

The United States, on the other hand, has seen some progress in its crypto regulatory efforts, with the approval of Spot ETFs (exchange-traded funds) for Bitcoin and Ethereum [ETH]. In July, Donald Trump promised to establish a national strategic reserve for BTC if elected President. The former President also expressed his commitment to making the U.S the world capital for BTC and crypto.

On the other hand, Russia recently passed crypto mining laws and established an experimental framework to drive international trade using crypto. The government announced plans in August to create stablecoins pegged to the Chinese Yuan and BRICS currencies to advance this ambitious crypto plan.

Russia's crypto plan and its challenges

Furthermore, it set up two crypto exchanges in St. Petersburg and Moscow to allow select firms and individuals to conduct trade and settlements using cryptocurrencies. The country's crypto pivot is its response to Western sanctions, which reportedly impacted its economy by delaying cross-border payments and trade.

In fact, a recent Chainalysis report suggests that the Russian government could be using several crypto exchanges, like Exved and Garantex, to evade sanctions. However, the firm noted that large-scale usage at the national and international levels could present challenges, such as sanctions on linked wallet addresses.

"On-chain sanctions evasion at scale remains highly improbable, given Russia's total foreign exchange reserves are just under half a trillion dollars…Wallet addresses associated with CEXs, mining services, and other on-chain entities can be identified, attributed, and potentially sanctioned."

It remains to be seen how Russia will overcome these obstacles as it aims to surpass the United States in crypto mining.

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