Leading Japanese Online Broker SBI to Pull Out of Russia’s Crypto Mining Sector – Mining Bitcoin News

SBI Holdings, the largest online brokerage house in Japan, is shutting down its crypto mining operations in the Russian Federation. Amid growing uncertainty about the future of such investments due to the ongoing conflict in Ukraine, as well as reduced mining activity, the financial firm said it plans to sell its equipment and withdraw.

Japan’s SBI brokers to complete withdrawal from Russian mining industry

Access to low-cost power and suitable climatic conditions made Russia an attractive destination for cryptocurrency miners when China cracked down on the industry in May 2021. However, sanctions imposed due to Moscow’s decision to attack Ukraine this year have hit bitcoin mining, among other Russian 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 tried to liquidate 30 million dollars in mining hardware installed in Siberia to avoid Western sanctions.

Russia’s invasion of Ukraine has created uncertainty about the prospects for mining in the energy-rich region, while the downturn in the crypto market has made it less profitable to mint digital currencies, a representative of SBI, the largest online broker in Japan, told Bloomberg. CFO Hideyuki Katsuchi revealed that the company plans to sell the equipment and pull out of Russia.

SBI entered the digital asset space earlier than other Japanese financial firms, but this year’s negative performance has led to a pre-tax loss of 9.7 billion yen ($72 million) from its crypto business in the second quarter, when the group also recorded a 2.4 billion yen net loss (over $15.8 million), the first in a decade.

The Japanese brokerage suspended mining operations in Siberia shortly after the war in Ukraine broke out, but it has not yet been decided when it will complete its withdrawal from Siberia, Katsuchi noted. The financial company has no other crypto operations 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 Tokyo authorities in July to pressure Japanese crypto exchanges and miners to cut ties with Russia.

In April, the International Monetary Fund (IMF) warned in a report that cryptomining could offer Russia and other sanctioned nations, such as Iran, a way to circumvent economic and financial restrictions imposed by the United States and its allies. These countries can use their energy resources to operate mining facilities and generate revenue from cryptocurrency mining and transaction fees.

According to a recent study, electricity consumption in Russia’s cryptomining sector has been steadily increasing in recent years, registering a nearly 20-fold increase over the five-year period since 2017. Siberia’s Irkutsk, which offers some of the lowest electricity prices in the country, is one of the most attractive regions for miners, next to the capital Moscow where they can benefit from well-developed energy and other infrastructure.

Do you know of other Japanese companies ending their crypto mining operations in Russia? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’ quote: “To be a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.