BitRiver is a Swiss-registered largest Russian mining company. Founded in 2017, it currently operates in three offices across the country and has several affiliated enterprises, which all fell under sanctions as well. BitRiver claims that Treasury’s decision damaged the company’s reputation and its international business.
“Therefore, the suit will contain a demand to remove BitRiver from the sanctions list, due to the lack of legal grounds for including the company since BitRiver is not a government agency, but a wholly-owned private company that in no way helps the Russian Federation to circumvent sanctions,” the official statement reads.
The company also accused the US of lobbying for the domestic mining industry. BitRiver believes that the Treasury imposed sanctions on them, trying to protect local miners against growing competition with Russia.
“Market participants are well aware that these actions by the US government constitute an attempt to shift the global balance of power towards American companies and squeeze the largest Russian player, BitRiver, off the market. We have recently received words of encouragement from our key partners and market participants in the US, EU, GCC, China, Russia, and the CIS,” said Igor Runets, BitRiver CEO.
The US added BitRiver to its list of sanctions in an attempt to block all streams of revenue that can sponsor the Russian invasion of Ukraine. It is the first time Treasury is taking action against a crypto mining company.
“Russia has a comparative advantage in crypto mining due to energy resources and a cold climate. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions,” the Treasury press release reads. “The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.”
The US decision came just a day after the International Monetary Fund issued its report that said Russia could evade sanctions by enhancing crypto mining with natural resources it cannot export.
“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,” the report reads. IMF also added that the share of mining in the sanctioned countries “suggests that the magnitude of such flows is relatively contained, although risks to financial integrity remain.”
I’ve already reported on how Russia can use crypto to evade western sanctions. The country ranks third in Bitcoin mining, accounting for 11% of the network hashrate. In January, President Wladimir Putin backed a Russian government proposal to tax and regulate the crypto mining industry. “We also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and well-trained personnel available in the country,” Putin said during the work meeting, where BitRiver CEO Igor Runets was present as well.
BitRiver claims its mining facilities are operating as usual. The company continues to provide services to international clients and announced plans to construct three new data centers. BitRiver also intends to launch Blockchain Technologies Development Center in Vladivostok and Blockchain Technology Training Center in Grozny.