The U.S. government has just sanctioned the first cryptocurrency mining company, which also happens to be from Russia.
This comes a day after the IMF warned that Russia could potentially evade economic sanctions by mining cryptocurrencies.
On April 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned BitRiver, a cryptocurrency mining company based in Moscow, prohibiting any business relations with U.S. citizens.
According to the statement, Russian commercial bank Transkapitalbank and ten subsidiaries of BitRiver and its Swiss-based holding company were also included in the sanctions for allegedly “being owned or controlled by the Russian Federation.”
The U.S. wants to prevent Russia from evading sanctions
The Treasury Department wants to prevent Russia and its allies from circumventing economic sanctions through Bitcoin mining. In the press release, the OFAC says Russia has significant “comparative advantages” in terms of cryptocurrency mining.
“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.”
In other words, despite Russia’s appeal, most crypto mining companies rely on imported technological equipment to set up mining farms, so these types of companies could become the next U.S. target.
Brian E. Nelson, U.S. Under Secretary for Terrorism and Financial Intelligence said the Treasury can and will go after any person or company that helps evade sanctions imposed by the U.S. toward Russia, as they would be supporting what he called “Putin’s brutal war.”
Russia Could Start Mining Cryptocurrency to Bypass US Influence
As CryptoPotato reported yesterday, cryptocurrency mining could be used by the Russian government to evade some economic sanctions, taking advantage of the country’s cold weather and the vast amount of energy it harbors.
According to a Bloomberg report, More than 17 million Russians own cryptocurrency, with almost 16.5 trillion rubles ($214 billion) in assets. This figure represents about 12% of the total capitalization of cryptocurrencies, which means that a large part of Russian citizens knows about cryptocurrencies and the different consensus protocols.
This is why the U.S. is directly attacking Russian mining companies. According to the country’s government, they are harnessing the country’s energy and transforming it into cryptocurrencies, which can be exchanged into rubles or U.S. dollars through decentralized platforms.
As Russian President Vladimir Putin said, regulation of cryptocurrencies “is in the spotlight” so perhaps mining could be seen as an ace up the government’s sleeve to evade economic sanctions.