Crypto miners in Russia capitalize on the bear market by hoarding ASIC devices

Cryptocurrency miners in Russia appear to be unbothered by the ongoing crisis of crypto mining as the local demand for mining hardware has reportedly been on the surge in Q4 2022.

Some crypto mining hardware distributors in Russia have faced a significant spike in demand for mining-designed application-specific integrated circuit (ASIC) chips, the local news agency Kommersant reported on Dec. 1.

Local dealer Chilkoot reported its ASIC sales in November and October exceeded its entire sales made in Q3. Over the past nine months, the distributor reportedly sold 65% more hardware than in 2021.

“We are working with legal entities, and we see that they began to buy 30% more equipment in one transaction than at the beginning of the year,” Chilkoot development manager Artem Eremin said.

BitRiver, Russia’s largest crypto mining-focused data center facility, has also recorded a notable increase in demand, reportedly seeing 150% growth over the past 10 months.

Russia’s reported surge in demand for cryptocurrency mining hardware comes amid tough times for the mining industry, with total Bitcoin (BTC) mining revenue hitting two-year lows in late November. A number of mining firms — including Argo Blockchain and Core Scientific — have even questioned whether they would be able to continue operations due to massive losses driven by the current bear market in crypto.

Miners in Russia have likely been increasingly hoarding crypto ASICs due to reduced prices of mining devices as well as low-cost energy.

51ASIC co-founder Mikhail Brezhnev reportedly said that Bitcoin mining in Russia can still be profitable despite a massive drop in BTC price this year. According to the executive, the cost of mining 1 BTC at the electricity cost of $0,07 per 1 kilowatt-hour with the most up-to-date equipment can generate roughly $11,000. At the time of writing, Bitcoin is trading at $16,975, down about 70% over the past year, according to data from CoinGecko.

The industrial crypto mining market in Russia has been benefiting from the current market situation, BitRiver’s financial analyst Vladislav Antonov reportedly said. He noted that the demand for ASIC equipment in the wholesale segment increased due to a drop in purchase prices, which have become as close as possible to the cost of production. That is the best entry point for investment, the expert reportedly said.

According to Antonov, a mining entry during a bear market can potentially generate “significant profit of tens of percent” over a three-year period.