The U.S. Treasury Department has sanctioned a major cryptocurrency mining company as part of a crackdown on companies and individuals avoiding sanctions on Russia imposed after the country invaded Ukraine in February.
The sanction targeted Bitriver AG and 10 Russia-based subsidiaries of the company pursuant to Executive Order 14024. The executive order, imposed under the International Emergency Economic Powers Act, blocks property with respect to specified harmful foreign activities of the Government of the Russian Federation.
BitRiver is headquartered in Switzerland but is Russian-owned and has extensive mining operations in Russia. The company claims to be Russia’s largest cryptocurrency miner.
Indeed, Russia itself ranks third in the world for bitcoin mining. According to Cambridge University, as of August, Russia has an 11.23% global monthly average hashrate share, reflecting its position in the market. Hashrate is a measure of the total computational power being used by a cryptocurrency network to process transactions in a blockchain.
“By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources,” the Treasury Department said in an April 20 statement.
Noting that Russia has a comparative advantage in cryptocurrency mining thanks to relatively low energy costs and a cold climate, the department added that nonetheless, “mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions.”
Russia’s comparative advantage has also been noted in high office. Russian President Vladimir Putin said in January that the country has distinctive characteristics that allow it to benefit from bitcoin mining. Putin cited the country’s power surplus and well-trained manpower that could be leveraged to grow the mining industry in the country even more.
Treasuring did not stop at BitRiver in the new sanctions. It also targeted a new range of Russian oligarchs, their family members and the Transkapitalbank bank.
“Treasury can and will target those who evade, attempt to evade, or aid the evasion of U.S. sanctions against Russia, as they are helping support Putin’s brutal war of choice,” said Under Secretary for Terrorism and Financial Intelligence Brian E. Nelson. “The United States will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion.”