Is AI Ambition Driving Russia’s Crypto Mining Pivot?
The Kremlin’s crypto mining drive may be motivated by its desire to turn Russia into a global AI powerhouse, experts have suggested.
Per the St. Petersburg-based news outlet Delovoi Peterburg, the tech and blockchain blogger Ani Aslanyan and others spoke in the wake of Moscow’s recent decision to ban mining in multiple regions until March 15, 2031.
Russia Crypto Mining Development: An AI Incentive?
Aslanyan questioned why Russia would be so keen to develop the crypto mining sector when the nation is expected to experience an electricity deficit “in the next five to 10 years.”
As such, the media outlet mused, crypto mining has become a “fundamental question of economic feasibility.”
Tech companies say “AI agents” are the next big thing in artificial intelligence after chatbots. Early versions have unresolved privacy and security flaws. https://t.co/6gO0dko16c
— The Washington Post (@washingtonpost) January 5, 2025
Delovoi Peterburg asked: “Is it necessary to create new energy capacities specifically for crypto mining?”
The expert opined:
“Mining farms and data centers require similar conditions: high power capacities, cooling systems, and energy infrastructure. And regions with cheap electricity make ideal locations for data centers.”
Aslanyan added that from the Russian state’s “point of view,” AI infrastructure is “a higher priority for the economy than crypto mining. AI brings more added value and technological advantages.”
“Data centers for AI require huge energy capacities. These capacities are comparable to those required for mining crypto.”
IT and blockchain blogger Ani Aslanyan
Lobbyists Pushed AI Angle
Mining was finally legalized in Russia last year after years of lobbying from industrial crypto miners.
In the lead-up to President Vladimir Putin’s decisive speech last year urging areas with “surplus power” to start mining crypto, industrial players said they would grant Moscow access to their new, state-of-the-art data centers for “state-run” tech projects.
Russian industrial miners have also spoken about building up AI resources alongside their fast-increasing crypto mining capacities.
The pro-Russian breakaway Moldovan region of Transdniestria is facing hours-long rolling power cuts after Russian gas supplies through neighboring Ukraine ended on Jan.1 https://t.co/3JADrUIuBT pic.twitter.com/SMDx7UTjdk
— Reuters (@Reuters) January 6, 2025
In November last year, BitRiver, Russia’s biggest crypto mining player, said that Moscow’s newfound crypto-keennes could help the country develop “global leadership” in the AI field.
Oleg Ogienko, the deputy director-general of communications at BitRiver, said:
“Industrial crypto mining has created a serious foundation for the launch of projects in the field of artificial intelligence. This has significantly increased the potential of Russian computing power.”
Private Crypto Miners: A Challenge for Moscow?
However, while the state may feel it can exercise control over industrial crypto miners and the AI sector, it may face a battle to keep private miners from sapping energy grids.
Private miners have been told they can use up to 6,000 kWh per month to mine crypto at home.
However, illegal miners appear to be set on stealing electrical power from the grid instead.
Evgeniya Burova, Director of Communications at Garantex, told the same media outlet:
“In some regions, miners have connected devices to household power grids on a massive scale. They have taken advantage of subsidized tariffs for individual households.”
Burova also said she did not expect home-based miners to “leave the regions where the government has banned mining.”
“Firms that mine cryptocurrency on an industrial scale will have to reconsider their business models.”
Evgeniya Burova, Director of Communications, Garantex
Vladimir Putin might have lost a slice of revenue after Kyiv closed its gas pipeline to Russian supplies, but Moscow already has alternatives that stand to shield it from any serious economic hit https://t.co/dclFh0YF1x
— Bloomberg Markets (@markets) January 6, 2025
Nikita Zuborev, a senior analyst at BestChange.ru, was more skeptical still.
He said that legal change would do little to stop illicit mining operations, whose masterminds were already breaking the law prior to the bans.
Zuborev said that “the peculiarities of the internal structure” in regions like Eastern Siberia would mean “the quality of future inspections” may be low. He said:
“As a rule, regulations and inspections are initiated from Moscow. And at the local level, […] they have quite close-knit cliques that will somehow bypass all these bans.”
Why Russian Crypto Miners Avoid St. Petersburg
Zuborev also explained why miners have tended to stay away from St. Petersburg.
The St. Alexander Nevsky Lavra, in St. Petersburg, Russia. (Source: Ninara [CC BY 2.0])
He cited high electricity costs “compared with many other Russian regions. Aslanyan concurred, explaining:
“The St. Petersburg climate plays a major role, with its high humidity rates and low winter temperatures. These factors make it difficult to maintain optimal conditions for mining rigs, which require cooling and stable temperature conditions. High humidity levels can lead to corrosion and other problems.”
Instead, Burova said, miners from St. Petersburg are “more likely to run Bitcoin ASIC miners in regions with cheaper electricity and mine remotely.”
Source: cryptonews.com
