US Treasury Takes Aim at Russia's Crypto Mining Industry With New Sanctions

The United States Treasury now has its crosshairs on Russian crypto miners for the first time as Russia's invasion of Ukraine enters its third month. The US Treasury Department's Office of Foreign Asset Control (OFAC) released a press release on April 20 announcing new sanctions against Russia-based cryptocurrency miner BitRiver as well as 10 subsidiaries to its Specially Designated Nationals list. The move is indicative of a broader push against Russia's crypto mining industry although the treasury does not mention any particular association between BitRiver and Vladimir Putin's regime.

The Treasury department stated that reliance on fiat payments and the importation of computer equipment makes Russia vulnerable to sanctions if the US focuses on hindering the companies providing those services.

Since government entities cannot stop the actual process of mining Bitcoin, the US Treasury decided to utilise other attack vectors that weaken the supply chain.

“Treasury is also taking action against companies in Russia's virtual currency mining industry,” said a government statement. "By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources," the statement adds.

"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."

The BTC mining company mentioned in the press release, BitRiver, was founded in 2017 and has three offices scattered across Russia. Legal ownership was changed to a Switzerland-based holding company in 2021, however, this company has been designated as operating in the “Russian Federation economy,” thereby making it and its ten Russian-based subsidiaries sanctionable.

The move also arrives a day after the International Monetary Fund (IMF) issued a report warning that Russia could try to use crypto to dodge sanctions.

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