Platforms listing ads for mining hardware have been registering declining demand since Bank of Russia’s call for a ban on the minting of digital currencies among other crypto activities. While mining may eventually be legalized, miners can expect to pay higher electricity bills.
Supply exceeds demand in the Russian mining chip market
Mining hardware is now more often offered than sought after, Russian online marketplaces have noticed. The trend began after the Central Bank of Russia (CBR) released a consultation paper this month, in which the regulator proposed a general ban on operations with cryptocurrencies, including mining, citing threats to financial stability and risks to investors.
A major online platform has recently told the business news portal RBC that the number of ads for the sale of coin minting equipment has increased in January while demand decreased. A drop in the purchases of video cards was also registered by Marvel Distribution, one of Russia’s leading retailers of these types of products.
Video card supply was up 12% in January compared to December, with demand for GPUs down 4%, one of the report’s sources detailed. The supply of mining rigs increased by 18% last month, while demand fell by 9% from the level of the last month of 2021. ASIC listings increased by 17% while searches specialized equipment decreased by 27%.
The shrinking demand has been confirmed by a representative of another marketplace, who noted that the CBR’s report has become a turning point in consumer behavior. That’s despite the monetary authority failing to gain support from other institutions and President Putin highlighting Russia’s competitive advantages as a mining destination.
Meanwhile, the federal government has offered an alternative approach, betting on regulating rather than banning cryptocurrencies. In late January, Deputy Prime Minister Dmitry Chernyshenko signed a regulatory roadmap for the sector that initially did not cover crypto mining. According to a recent report by the daily Izvestia, Chernyshenko then asked several relevant departments and regulatory bodies to add mining to the document.
Industry experts have expressed doubts that prohibiting the extraction of digital currencies is technically possible. Energy-rich Russia is among the world’s major mining hotspots and its significance has increased since China launched a crackdown on the sector last May. Calls have been mounting among officials in Moscow to recognize mining as a business activity, tax it accordingly, and introduce higher electricity rates for miners.
