One of the world’s biggest mining pools in Flexpool halted services for Russian users following the country’s invasion of Ukraine.
Russian users temporarily banned from Flexpool
The geopolitical crisis in Eastern Europe unsurprisingly affected markets last week, with Russian users being particularly hard hit by its effects.
Flexpool, the fifth-ranked Ethereum mining pool in the world, suspended its services for Russian users after the country’s government decided to invade its smaller neighbour. In a move to show solidarity with Ukraine, Russian IP addresses will not be able to use the pool’s services. A Flexpool spokesperson commented on the official channel that the company “generally does not get involved in politics” despite its personal views, but that “this is greater than politics, greater than anyone. This is a war that may end the world. It certainly is ending the lives of many innocent people in Eastern Europe.” All users with Russian IP addresses will have their outstanding balances paid out to them.
Another Ethereum mining pool, Hiveon, expressed solidarity with Ukraine but did not comment on possible actions it would take. Even though Flexpool apologized to Russian miners, the ban will certainly not sit well with some that will feel unfairly targeted for their government’s actions. However, users will likely be able to circumvent such a measure by using a VPN network.
How the war could affect Bitcoin mining
The war will undoubtedly have a strong effect on crypto prices, although it is unclear which direction. While some point out that the financial sanctions imposed will highlight the benefits of cryptocurrency, others fear that global political uncertainty will lead to a crash in risk-on assets like Bitcoin. However, even more intriguing is the effect this could have on Bitcoin mining.
Russia became the second-biggest Bitcoin mining nation after China’s mining ban in 2021. The country long struggled with its cryptocurrency policy and the back and forth between being pro and contra Bitcoin exposed the differences in opinion in Russia’s political elite. However, the country eventually came out in favour of crypto, passing a bill that will regulate cryptocurrency as a currency.
But with the onset of harsh economic sanctions imposed by Western nations, Russia may become even more interested in crypto and particularly Bitcoin mining. Although cryptocurrency in itself will not make up for potential financial isolation caused by the expulsion from the SWIFT financial messaging service, it could increasingly serve as liquidity and potentially even as a means of payment. US politicians have already warned companies against trying to dodge sanctions by turning to crypto, but Russia could very well try to incentivize increased use of digital assets until its own CBDC is ready.
As for miners themselves, they probably do not have to worry much. Banning the mining industry in this situation would be shooting yourself in the foot. On the contrary, don’t be surprised if Russia tries to attract even more miners by offering incentives in order to develop more influence over Bitcoin’s hashrate.
