Japan’s largest online broker, SBI Holdings is shuttering its crypto mining business in Russia. With Russia and Ukraine embroiled in conflict, there is increasing uncertainty about the future of these investments.
The financial company also said that mining profits have also gone down, given the downturn in the crypto market, and it will now sell its mining equipment and exit the Russian crypto market.
Mining industry hit
When China cracked down on the mining industry last year in May, mining operations shifted to different areas.
Russia had become a popular destination for cryptocurrency miners because of its suitable climatic conditions, along with low-cost energy.
However, the Russian military invaded Ukraine this year in February and this resulted in Moscow getting sanctioned by the West.
This has taken a toll on a number of industries in the Russian Federation, which also includes bitcoin mining.
This spring, Bitriver, which is based in Switzerland, and one of the biggest mining data-center operators with a considerable presence in Russia, found itself under fire by the US Treasury Department.
Likewise, in order to avoid Western Sanctions, US firm Compass Mining had also decided to liquidate its mining hardware worth $30 million that was installed in Siberia.
Russia and Ukraine
A representative of SBI Holdings said that the prospects of the mining business in Russia had become very uncertain after the energy-rich region’s invasion of Ukraine.
Moreover, they also said that minting digital currencies had also become less profitable because of the downturn in the crypto market.
Hideyuki Katsuchi, the Chief Financial Officer of SBI Holdings, disclosed that the company was planning on selling its mining equipment and would withdraw from the Russian market.
The online brokerage had dipped its toes in the digital asset space earlier as opposed to other Japanese financial companies.
However, the negative developments in the year have resulted in a pre-tax loss of around 97 billion yen ($72 million) for the company in the second quarter because of its crypto business.
In the same quarter, the group also registered a net loss of 2.4 billion yen, which is around $15.8 million, which was a first in a decade.
Shortly after the war between Russia and Ukraine broke out, the Japanese company suspended its mining operations in Siberia.
However, Katsuchi said that they had not yet decided when they would completely withdraw and the executive also added that they do not have any other crypto business in the country.
But, he did add that they did not have any intention of shutting down their commercial banking unit in Moscow called SBI Bank.
This move has come after reports in July that US diplomats had put pressure on authorities in Tokyo to get Japanese crypto miners and exchanges to sever their ties with Russia.
The International Monetary Fund (IMF) had warned in a report in April that sanctioned countries like Russia may use cryptocurrency for circumventing financial and economic restrictions imposed by the US and others.