May 20, 2024

Several Governments Are Actively Involved In Bitcoin Mining

Why are Governments Involved In Bitcoin Mining?

Why are Governments Involved In Bitcoin Mining?

Government involvement in Bitcoin mining, we reported about it already, is not commonly detailed in the public domain, but there have been instances reported through various news outlets. For instance, Whit Gibbs, a cryptocurrency expert and White House adviser, implied during an interview that the U.S. government might be engaged in Bitcoin mining, a statement that aligns with information from a former intelligence agent who suggested that such activities have been occurring since 2013.

Additionally, it is public knowledge that countries like El Salvador and Venezuela are actively mining Bitcoin. These activities are typically shrouded in secrecy due to national security concerns, and public revelations are rare and often lack comprehensive details​​​​.

The Benefits for Governmental Bitcoin Mining

Governments might be interested in Bitcoin mining for several reasons:

  • Economic Gains: Bitcoin mining can be a significant source of revenue, especially when the price of Bitcoin is high.
  • Technological Development: Engaging in Bitcoin mining can promote technological advancement and digital economy growth.
  • Energy Management: Some countries with excess energy resources can use Bitcoin mining to capitalize on surplus energy.
  • Strategic Assets: Bitcoin can be considered a strategic asset, and having a reserve could be beneficial for national economic strategies.
  • Control and Regulation: By participating in mining, governments can have a better understanding and potential control over the cryptocurrency market within their jurisdictions.

For Russia specifically, the subsidized mining center may serve as an economic boost for the region, technological advancement, and as a means to exert influence over the emerging digital financial landscape, just like they did on agriculture during their aggression towards Ukraine.

Russian Goverment into Bitcoin Mining

There are government-involved Bitcoin mining activities in Russia. A significant new cryptocurrency mining center in Siberia, which has been subsidized by the Russian government, was slated to open in 2023. This facility, constructed by Bitriver-B with the support of the Corporation for the Development of the Far East and the Arctic (KRDV), will house 30,000 crypto mining machines. KRDV, controlled by the Ministry for the Development of the Far East and the Arctic, provides various state support mechanisms such as tax breaks and reduced electricity tariffs for this facility, indicating direct government involvement in its operation​​.

The regulatory environment for cryptocurrency mining in Russia is still unclear, with a draft bill on the legalization of crypto mining facing objections from the Central Bank of Russia and law enforcement agencies, which indicates the complexity of government involvement in the sector​​.

Bitcoin Mining in Iran

Iran has turned to Bitcoin mining as a strategic response to economic sanctions. By mining Bitcoin, which consumes a significant amount of electricity, Iran can leverage its substantial fossil fuel resources for revenue. The country has recognized cryptocurrency mining as an official industry, offering cheap electricity to miners and mandating that they sell their Bitcoin to the central bank.

This approach serves dual purposes: it bolsters the economy with a new income stream and utilizes cryptocurrencies as a workaround for trade restrictions, allowing Iran to indirectly sell its oil and natural gas by consuming them for Bitcoin mining and using the mined Bitcoin for international trade. This process helps to bypass sanctions that have been imposed on the country’s financial institutions and the direct sale of its oil, providing a lifeline for the economy by acquiring essential imports and maintaining trade relations​.

And Of Course… North Korea

North Korea is reported to have intensified its cryptocurrency mining operations as a method to evade international sanctions. Recorded Future, a cybersecurity threat analysis firm, has detailed that the regime in North Korea has engaged in cybercrime and cryptocurrency mining as part of its strategy to circumvent sanctions aimed at its nuclear weapons program.

The efforts include mining Bitcoin and a privacy-oriented currency called Monero, which makes transaction flows difficult to trace. The UN has estimated that North Korea has stolen as much as $2 billion through sophisticated cyberattacks on financial institutions and cryptocurrency exchanges. The expansion of these mining operations suggests that North Korea views cryptocurrencies as both a source of revenue generation and a means to move and use illicitly obtained funds​​.