SBI Holdings, the largest online brokerage firm in Japan, is closing its crypto mining operations in the Russian Federation. Amid growing uncertainty about the future of these investments due to the ongoing conflict in Ukraine, as well as declining mining profits, the financial firm said it plans to sell its equipment and withdraw .
Japanese broker SBI set to withdraw from Russian mining industry
Access to low-cost electricity and suitable weather conditions made Russia an attractive destination for cryptocurrency miners when China cracked down on the industry in May 2021. However, sanctions imposed following the decision of Moscow attacking Ukraine this year have affected bitcoin mining industries.
One of the largest mining data center operators with a significant presence in Russia, Switzerland-based Bitriver was targeted by the US Treasury Department this spring. Then, the American company Compass Mining sought to liquidate $30 million worth of mining equipment installed in Siberia in order to avoid Western sanctions.
Russia’s invasion of Ukraine has created uncertainty over the outlook for mining activity in the energy-rich region, while a slowing crypto market has made it less profitable to mint digital currencies, said to Bloomberg a representative of SBI, Japan’s largest online brokerage. . Chief Financial Officer Hideyuki Katsuchi has disclosed that the company plans to sell its equipment and pull out of Russia.
SBI entered the digital asset space earlier than other Japanese financial firms, but negative developments this year resulted in a 9.7 billion yen ($72 million) pre-tax loss from its crypto business in the second quarter, when the group also posted a net loss of 2.4 billion yen (over $15.8 million), a first in a decade.
The Japanese brokerage firm suspended mining activities in Siberia shortly after the outbreak of war in Ukraine, but it has not yet decided when it will complete its withdrawal from Siberia, Katsuchi noted. The financial firm has no other crypto business in Russia, the executive pointed out, but it intends to continue operating its Moscow-based commercial banking unit, SBI Bank. The move comes after US diplomats reportedly urged authorities in Tokyo in July to pressure Japanese crypto exchanges and miners to sever ties with Russia.
In April, the International Monetary Fund (IMF) warned in a report that cryptocurrency mining could offer Russia and other sanctioned countries, such as Iran, a way around economic restrictions. and financial constraints imposed by the United States and its allies. These countries can use their energy resources to power mining facilities and generate revenue from cryptocurrency mining and transaction fees.
According to a recent study, electricity consumption in Russia’s crypto-mining sector has steadily increased over the past few years, registering an almost 20-fold increase over the five-year period since 2017. Irkutsk Siberia, offering some of the lowest electricity rates in the country, is one of the most attractive regions for miners, alongside the capital Moscow, where they can take advantage of well-developed energy and other infrastructure.
Do you know of any other Japanese companies that are shutting down their crypto mining operations in Russia? Tell us in the comments section below.
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