As Bitcoin tumbled to new lows on cryptocurrency exchanges last week, Russia saw a significant rise in the number of second-hand mining rigs available for sale.
Online Russian marketplace Youla reported a 24% increase of used rig sales in that week, indicating that many of the country’s amateur cryptocurrency miners where ceasing their mining activities and liquidating hardware to recoup losses.
Another disturbing fact for Russian investors looking for indications of a future lift in market fortunes is the number of searches online for video cards which Youla suggests have dropped by 25% on its own platform.
Clearly, the profitability of mining due to the direction of the market, again a reflection of Bitcoin’s current low value, is impacting on the sales mining equipment and GPUs. However, Youla has noticed an increase in searches for specialized equipment such as ASICs-based rigs which are suited to mining cryptocurrencies that require more hashing power.
The fall in the value of cryptocurrencies has consequently affected hardware pricing, with rigs that might have sold for USD 3,500 in January now achieving prices some 37.5% less as demand falls. Although small-scale mining by amateur miners is clearly being hit hard, companies are developing more financially viable ways of operating.
Crypto mining in Russia is becoming a big industry on an individual level but more importantly for the government, at an industrial scale also. This is now driving operators towards locally run Russian mining pools. A majority of these larger facilities currently work with Western and Asian mining pools, increasing the need for Russian firms to work within the restriction imposed by overseas pools often including prohibitive tax regulations.
Russia has become popular with overseas companies due to its low energy costs, with another recent drop in electricity rates recently from RUB 5-7 rubles (USD 0.075-0.125) to 4-5 rubles (USD 0.06-0.075) per kW in the last year. Prices are half that amount in some areas, making the country one of the cheapest in the world for energy.
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