Last month, we launched the hosting solution Compass. This month, we are launching the first instalment of HASHR8’s Bitcoin Mining Index. The index will be a collection of research reports which highlight the state of the mining industry in various countries worldwide.

Each research report will give an overview of the mining industry within a region. The reports are designed to help miners gauge the attractiveness of prospective mining regions and weigh the pros and cons of each. Factors like electricity costs, capital expenditure costs, and regulatory stance are investigated.

After several reports are published, HASHR8’s Bitcoin Mining Index will design a metric to quantify the attractiveness of various factors for mining in a given region. The strength and suitability of factors like OpEx costs, hardware import taxes, and legal clarity will be captured in a quantitative metric.

The inaugural release of the Bitcoin Mining Index explores the mining industry in Russia. Russian miners are estimated to be within the top-three contributors to Bitcoin network hashrate. You can access the full report below and we have also shared some highlights.

Download here: The State of Bitcoin Mining in Russia

Research Report Highlights

  • The dominant share of Bitcoin mining facilities in Russia are based in the Siberian region. Advanced hydropower infrastructure in this region allows miners to secure extremely competitive electricity rates for the long-term. Miners can also easily scale within Siberia without being subject to higher electricity prices. Electricity rates for facilities are typically in the range of $0.02 to $0.025 per kWh at current foreign exchange rates. Rates as low as $0.012 can be secured if miners avoid all peak hours. This is an attractive strategy for miners operating old-generation mining equipment.
  • Mining rigs imported directly from China are subject to a 20% VAT at customs. However, many miners import indirectly through Kazakhstan. Mining rigs imported from China to Kazakhstan are subject to a 12% VAT. As Kazakhstan and Russia share the Eurasian Customs Union, the hardware can be transferred from Kazakhstan to Russia at no extra cost.
  • The Russian government passed a federal law in August 2020 which legitimizes Bitcoin as an official economic activity. The Digital Financial Assets Act will come into effect in January 2021. While it clarifies that Bitcoin mining is legal, the law did make cryptocurrency exchanges illegal. To comply with the law, Bitcoin mining facilities will be required to carry out their exchange and mining pool activities with overseas entities. Facilities can also provide hosting services to overseas entities. Domestic entities can import hardware and rent to overseas customers.