Russian Siberian crypto mining operations held by SBI Holdings, a Tokyo-based provider of online financial services, will close shop. The company claimed that this decision was made in part because of the conflict between Russia and Ukraine.
The decision to withdraw was made in light of the geopolitical unpredictability brought on by the ongoing Russia-Ukraine conflict and a decline in the profitability of cryptocurrency mining as a result of a lengthy market downturn, according to media reports on Friday citing an unnamed SBI Holdings spokesperson.
Hideyuki Katsuchi, the company’s chief financial officer, “announced the plan to sell machinery and withdraw earlier this week,” according to Bloomberg. It’s unclear when it will finish the withdrawal, though.
SBI Holdings’ first negative quarter
The change comes shortly after the team decided to halt mining activities in Serbia following the Russian invasion of Ukraine in February. SBI Holdings only has a mining rig in Serbia; the company has no additional cryptocurrency ventures in Russia. The report clarifies that the company will continue to run its commercial banking division, SBI Bank LLC, in Moscow.
According to media sources, the decision resulted in a 9.7 billion yen ($72 million) pretax loss and a 2.4 billion yen ($17.5 million) net loss for the three months that ended on June 30. This was SBI Holdings’ first negative quarter in ten years.
Given the cheap energy, Siberia has been a popular location for crypto mining in recent years. After China outlawed cryptocurrency mining operations in May 2021, the trend gained traction.
Crypto mining in Russia
Crypto mining consumes more energy than agriculture in Russia, over 2% of it, according to estimates from the country’s Ministry of Industry published in May 2022.
According to reports, President Vladimir Putin is interested in Russia being a center for cryptocurrency mining since it has “surplus electricity” and skilled workers.
Additionally, in June, Russian lawmakers approved draft legislation that would exempt “digital assets issuers” and the “operators” of their “information systems” from paying value-added tax.
