US Targets Bitcoin Mining Company in Latest Round of Russian Sanctions

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In Brief
  • Bitriver has been sanctioned for "helping support Putin’s brutal war."

  • The Russian mining firm offers eco-friendly capacity internationally.

  • This is the first time the Treasury Dept. has targeted a crypto company.

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Uncle Sam is tightening the screws on Russia with another round of sanctions, but the latest restrictions include Bitcoin mining operations for the first time.

On April 20, the U.S. imposed more sanctions on several individuals, entities, a Russian commercial bank, and even a crypto mining company.

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) stated that it had designated a cryptocurrency mining company for the first time. The firm in question was Switzerland-based Bitriver AG, a Russian Bitcoin mining operation.

It pointed out that the company operates out of three offices across Russia despite relocating legal ownership of its assets to Switzerland last year.

First crypto mining company sanctioned

Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, stated

“Treasury can and will target those who evade, attempt to evade, or aid the evasion of U.S. sanctions against Russia, as they are helping support Putin’s brutal war of choice,”

The United States has imposed several rounds of sanctions on Russia since its Feb. 24 invasion of Ukraine. These sanctions have included the country’s largest banks and lenders, and now crypto companies. Bitriver was designated as “having operated in the technology sector of the Russian Federation economy.”

Bitriver, founded in 2017, claims to be the world’s largest provider of climate-friendly cryptocurrency mining. It touts a 100-megawatt renewable energy data center with 75,000 miners in the Siberian city of Bratsk.

The Treasury Department said that the firm operated its mining farms selling capacity to international clients, which helped Russia “monetize its natural resources.” It added:

“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 addition to the mining firm, the Treasury also sanctioned Russian bank Transkapitalbank, and more than 40 people and entities led by Russian oligarch Konstantin Malofeyev.

Mounting anti-crypto rhetoric

The rhetoric has been mounting among anti-industry politicians in the U.S. who still believe that Russia is using crypto assets to avoid sanctions.

A few days after the invasion in February, the Treasury Department declared that crypto transactions were “deceptive or structured transactions or dealings” that could be used in sanctions evasion.

This week, the International Monetary Fund (IMF) added to that sentiment with a warning that countries like Russia and Iran could use cryptocurrency to evade sanctions.

The notion that Russia will turn to crypto to avoid sanctions has been widely disputed by economists and industry experts, however.

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Martin has been covering the latest developments on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

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