The founder of BitRiver, Igor Runets, is now facing Russian justice. He has been placed under house arrest on charges of tax evasion, while his company, a major player in crypto mining in Russia, is threatened with bankruptcy.
In brief
- Igor Runets was placed under house arrest, with a limited time limit to appeal, limiting his freedom for the duration of the legal proceedings.
- BitRiver is the subject of a recovery request for more than $9 million filed by a subsidiary of the En+ group, in connection with the non-delivery of mining equipment.
Igor Runets' legal troubles weigh on BitRiver
Igor Runets was placed under house arrest on January 31 on three counts of allegedly hiding funds to evade taxes. His lawyers have little time to appeal before the decision takes effect, scheduled for Wednesday. If the appeal fails or is not filed, Runets will remain confined to his home for the duration of the procedure. This legal restriction comes at a delicate time for BitRiver, the largest cryptocurrency mining operator in Russia, and could disrupt the day-to-day management of the company.
BitRiver on the verge of bankruptcy
Founded in 2017, BitRiver quickly rose to prominence under the leadership of Runets, becoming a key player in industrial mining in the country. The company operates 15 data centers, representing a total capacity of 533 megawatts and more than 175,000 servers. Its early positioning earned Runets a central place in the Russian crypto ecosystem.
But despite this rise, BitRiver has faced headwinds. In 2022, the company was sanctioned by the United States following Russia's invasion of Ukraine. According to Bloomberg, it was nevertheless considered a potential beneficiary of the regulatory relaxations planned for 2024as part of the Russian strategy for adopting digital currencies.
According to Kommersant, BitRiver could now be on the verge of bankruptcy. A subsidiary of the En+ group has applied to a regional arbitration court, demanding recovery of a debt of more than $9.2 million, following the non-delivery of mining equipment already paid for by BitRiver's parent company, Fox Group.
Sources close to the matter also mention a growing energy debt, internal conflicts and disagreements over equipment management. Discussions are reportedly underway around a possible change of ownership and the management of the company's remaining assets. Some experts believe that a BitRiver collapse could accelerate restructuring and mergers in the Russian mining sector, while changing forecasts of energy consumption of large-scale operations.
A sector in full tension
BitRiver's difficulties reflect a broader trend in Russian mining. Several facilities have already ceased operations, hampered by local restrictions. Many executives have left their positions in recent months. The halving of Bitcoin, combined with rising electricity costs and the fall in the price of BTC, has weakened the entire sector. Many operators are considering reorienting their infrastructure towards services like cloud computing.
Despite everything, Russia remains a heavyweight in the sector, representing the second largest mining power in the world, just behind the United States, according to a Hashrate Index report published on December 31.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
