What did this Russian crypto mining company do that the United States wants to sanction it

As the Russia-Ukraine conflict continues, the United States has once again expanded sanctions on Russia.

On April 20, 2022, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) released a list of entities and individuals that help Russia evade economic sanctions imposed on Russia by the United States and its international partners. U.S. Treasury officials said the new targets are Russian commercial bank Transkapitalbank and a network of more than 40 people, including oligarch Konstantin Malofeyev, who are helping the Kremlin evade economic penalties.

It is worth noting that the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) also decided to sanction Russian virtual currency mining companies. This is the first time that the U.S. Treasury Department has sanctioned a cryptocurrency mining company .

The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) said that by operating large-scale mining farms that can sell cryptocurrency mining power internationally, these companies help Russia monetize its natural resources. Due to its energy resources and cold climate, Russia has a comparative advantage in crypto mining and is home to the third largest computing power in the world. Among them, OFAC specifically named Bitriver and its 10 subsidiaries in Russia.

It is reported that Bitriver was founded in Russia in 2017. Although Bitriver transferred its ownership to a holding company based in Switzerland in 2021, the United States still sanctioned Bitriver this time . What exactly did this Russian crypto mining company do? Golden Finance will take you to find out.

En+ Group + BitRiver: Monetizing Russia’s Natural Resources

One of the biggest reasons for BitRiver’s sanctions this time may come from the Russian energy and metals giant En+ Group.

On November 11, 2020, BitRiver announced the establishment of a joint venture, Bit+, with En+ Group to jointly mine cryptocurrencies using low-cost and green hydropower.

BitRiver plans to expand its mining farms through hydropower plants owned by En+ Group in the Irkutsk and Krasnoyarsk regions, and plans to increase the total capacity of its mining farms to more than 500 megawatts by the beginning of 2022 .

BitRiver Expansion Plan

According to public information, En+ Group is an energy and metal giant. It owns Rusal, one of the world's largest aluminum producers, and is also the world's largest independent hydroelectric power company, with an installed capacity accounting for 8% of Russia's national installed capacity.

According to Wikipedia, En+ Group has four large hydropower stations in Russia, mainly located in Siberia, where the temperature is lower, the population is smaller, and the demand for electricity is low, making it very suitable for building large-scale mines.

Hydropower stations under En+ Group

Bitriver has built large mining farms at hydroelectric power stations such as Ust-Ilimsk and Bratsk

The founder of En+ Group is Russian oligarch Oleg Vladimirovich Deripaska . As early as 2018, the US government sanctioned En+ Group and its founder Oleg Vladimirovich Deripaska due to Russia's annexation of Crimea in 2014.

In 2022, due to Russia's invasion of Ukraine, the British government also announced sanctions against seven Russian oligarchs, Oleg Vladimirovich Deripaska was one of them, including asset freezes and travel bans.

In addition to cooperating with En+ Group to establish a large-scale mining farm, Bitriver also issued its own cryptocurrency in April 2021.

Bitriver Token BTR

According to Bitriver’s official website, BTR is an ERC-20 utility token based on the Ethereum blockchain. BitRiver token BTR is currently listed on Bithumb Global and XT.com.

BTR Token Information

BTR token uses include:

Mining at BitRiver’s data centers : BitRiver will ensure that sufficient electricity is available for those who hold BTR tokens for three consecutive months. Bitriver will provide mining equipment with electricity at least equal to the nominal value of the holder’s BTR tokens. For example, if a holder has 100,000 BTR tokens, each equivalent to 1 watt, Bitriver will provide up to 100,000 watt-hours or 100 kilowatt-hours of electricity at one of its mining centers to provide the best hosting price to place the holder’s new equipment. Bitriver calculates the average daily value of the investor’s account for the last three months and provides electricity capacity at least equal to that value.

Staking to get extra tokens: Token owners should stake their tokens in Bithumb and lock them. The investor will receive new tokens into his/her trading account on the settlement date based on the average daily number of tokens held in the past month. The number of new tokens will be calculated at 10% per year.

Payment for BitRiver supporting services: BTR tokens can be submitted to BitRiver once a month to pay 10% of the monthly bill.

Free maintenance service : Holders can get free maintenance service for mining equipment located in BitRiver mining farms in a specific month by paying 10% of the monthly bill with tokens.

BTR Token Buyback: BitRiver intends to buy back all BTR from token holders during the month between April 12, 2026 and May 12, 2026 at a nominal value of $0.3504 per BTR. Token holders will be notified of the buyback offer and price two weeks prior to the token expiration date on April 12, 2026. BitRiver commits to destroy 100% of the repurchased BTR tokens.

Bitriver, mining machines, miners and mining pools

According to Bitriver’s official website, Bitriver also provides integrated services for purchasing and hosting S19 mining machines.

Official website information also shows that in addition to its own mining machines, Bitriver currently hosts approximately 75,000 mining machines in its mining farms.

In addition, BitRiver also announced in 2020 that it had reached partnerships with Binance Mining Pool and ViaBTC Mining Pool respectively.

As a result of the US government's sanctions on BitRiver, Bitcoin miners may move their managed mining machines away from the BitRiver mine, and Bitcoin mining pools may also refuse to connect to BitRiver's computing power .

Under the sanctions of the US government, BitRiver may have to build its own mining pool to deal with it.

Whether a Bitcoin mining pool can survive under sanctions from the world's most powerful government is also a new stress test for Bitcoin itself.