Russia Gears Up For Crypto Mining Amid Sanctions: Compass Mining To Provide The Hardware

United States cryptocurrency mining firm Compass Mining Inc. is hastily liquidating $30 million worth of Bitcoin BTC/USD mining hardware in Russia after Swiss rival BitRiver was struck with sanctions over its activity in Russia.

What Happened: Compass Mining CEO Whit Gibbs said that the firm is selling crypto mining hardware with a capacity of 12 megawatts that cannot be moved out of Russia due to sanctions, according to a recent Bloomberg report. The company expects to recover most of the equipment's value and plans to distribute the proceeds among about 2,000 customers, who own the hardware that is being sold.

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The equipment being sold represents about 15% of Compass Mining's full capacity, and the firm expects to increase its capacity to 355 megawatts by the end of 2022 from about 70 megawatts — despite getting rid of its Russia-located equipment.

The company also has another 10 megawatts of mining hardware that it previously planned to send to its Russian facility that will instead be redirected to Texas. The company's 11,000 customers own from one to five machines on average.

The action follows a recent International Monetary Fund report that Russia could mine Bitcoin in an effort to evade the economic sanctions that were imposed on the nation after it invaded Ukraine.

According to the paper, "over time, sanctioned countries could also allocate more resources toward evading sanctions through mining. Mining for energy-intensive blockchains like Bitcoin can allow countries to monetize energy resources, some of which cannot be exported due to sanctions."

At the end of May, Russian Deputy Minister of Energy Evgeny Grabchak urged that cryptocurrency mining be regulated, and effectively legitimized, as quickly as possible. He insisted that the lack of clarity on mining crypto "needs to be [eliminated] as soon as possible" and suggested that the government should determine crypto mining sites.

Grabchak said energy sources for the industry should be freed up at the regional level and not the federal level — which needs to be regulated with regional development plans.