The U.S. Treasury Department targeted bitcoin miners operating in Russia. In the latest round of its sanctions, they explained that it is destroying companies in Russia’s virtual currency mining industry.

According to data from the University of Cambridge, Russia is the third largest destination in the world for bitcoin mining.

“By operating extensive server farms selling virtual currency mining capacity around the world, these companies are helping Russia to monetize their natural resources”Under Secretary for Terrorism and Financial Intelligence Brian Nelson said in a press release published Wednesday afternoon.

The sanctions come as we enter the third month of Russia’s invasion of Ukraine.

“Russia has a comparative advantage in crypto mining due to energy resources and cold weather. However, mining companies rely on imported IT equipment and fiduciary payments, making them vulnerable to penalties, ”the statement continued.

The United States views revenue from the crypto mining industry as a potential threat to the effectiveness of its sanctions regime, and the Treasury said it is committed to ensuring that there is no asset turning mechanism for the Putin regime to offset the impact of the sanctions.

Among the companies targeted by US sanctions are BitRiver, which was founded in 2017 and, as the name implies, operates its mining farms with hydroelectric power. The mining company employs more than 200 full-time people in three offices in Russia, according to its website.

The Office of Foreign Assets Control has selected 10 Russian-based BitRiver subsidiaries in its latest series of sanctions on companies and individuals helping Russia soften the blow of economic sanctions.

The concern is that, similar to how Iran allegedly uses bitcoin mining to avoid sanctions, Russia could also channel its vast energy resources. towards crypto mining operations as a way to avoid Western economic blockade.

FI warns about mining

The International Monetary Fund warns in a new report that bitcoin could allow countries like Russia to monetize energy resources, “Some can’t be exported because of the penalties.

The U.S. Congress voted to ban the import of oil, gas and coal from Russia, while the European Union is considering similar measures, despite the bloc’s high hopes for Moscow for in resources. EU proposes to ban Russia’s coal, and oil sanctions are also being prepared.

The IMF warns that this type of monetization of energy resources through crypto mining occurs “directly in blockchains and outside the financial system where sanctions are imposed” and that miners are directly earn revenue from users who pay mining fees. ” transactions with miners ”, which may include authorized governments.

The size of mining operations is constrained by the size of the sanctions imposed by the West on Russia.

The IMF points out that mining participation in sanctioned countries is “relatively contained”.

The organization estimates that the monthly average of all bitcoin mining revenues last year was approximately $ 1.4 billion, where Russian miners could get close to 11% and Iranian miners 3%.