Japan’s largest online broker, SBI Holdings Inc., has joined the turmoil in the region caused by the possibility of US sanctions by announcing that it will cease crypto-mining operations in Russia.
A representative told Bloomberg News that the mining industry in Siberia is in limbo due to Russia’s invasion of Ukraine and that the recent worldwide market meltdown in cryptocurrencies has made it less economical to mine cryptocurrencies. Early this week, CFO Hideyuki Katsuchi stated the company’s intention to sell equipment and depart.
The Siberian mining operations were suspended shortly after Russia started a military intervention in Ukraine on Feb. 24.
SBI takes a hit – Hash Rates Dip
SBI’s crypto asset business reported a pretax loss of 9.7 billion yen ($71 million) in the second quarter of the fiscal year of 2022 as a result of the move. According to reports, this was the first quarterly loss for the Sumitomo Mitsui Financial Group-backed company in a decade, as the company lost a total of 2.4 billion yen ($17.5 million).
Public mining data from SBI’s crypto mining company, SBI Crypto, lines up with stories of mining bans in Siberia. The mining hashrate for SBI Crypto dropped from 5,600 PH/S in the middle of February to 3,300 PH/S on August 18, 2022, a drop of around 40%, as seen through the lens of data from the blockchain explorer BTC.com.
Despite shutting down several mines in Siberia, Bloomberg reports that SBI is still conducting mining activities in Russia.
An SBI representative allegedly remarked that the bank has not yet decided when it will finish its Siberian exit. SBI Group does not operate any other cryptocurrency-related businesses in Russia but will maintain its commercial banking operations at its Moscow-based SBI Bank.
Russia became the third highest BTC hash rate contributor after the US and Kazakhstan last year. A combination of China’s return to the top three mining economies in early 2022 and the decision by many miners to avoid operating in Russia owing to geopolitical concerns caused the country to lose its hash rate dominance swiftly.
Back in April, BitRiver, Russia’s leading crypto data center operator, was hit with sanctions by the U.S. Treasury Department for its role in the country’s massive imports of crypto mining hardware from other countries. Some U.S. mining companies even attempted to liquidate by selling off their mining hardware to evade sanctions.
