Two electric power stations in Russia were recently sold to a cryptocurrency miner looking to expand his operations – the latest sign that the country’s government-supported push to become a cryptocurrency mining hub has been successful.
The two stations are situated in the Perm Region on the western slopes of the Middle Ural Mountains, and in the neighboring Republic of Udmurtia. The facilities will be used as data centers as well as housing for cryptocurrency mining equipment and a center for cryptocurrency mining. The price paid for the two stations? Roughly 160 million rubles (about $3 million), according to RT.
After initially approaching cryptocurrencies with skepticism, the Russian government last summer signaled that it would instead try to regulate and embrace the markets.
That trend has culminated with the Russian Ministry of Finance drafting a bill to legalize the trading of cryptocurrencies on approved exchanges, according to Deputy Finance Minister Alexei Moiseev, who has indicated that the government is seeking to provide greater oversight. President Vladimir Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, and initial coin offerings, as well as defining everything that relates to digital money, by July.
The bill will open the door to more open cryptocurrency trading and investment within Russia, as some countries like China have sought to stamp out both mining and trading.
In August, a company known as Russian Miner Coin, or RMC, announced that it would try to raise $100 million in an initial coin offering, promising to allocate 18% of the company’s mining revenue to holders of their tokens. The company was founded by a close aide to Putin.
The law currently being written by the Duma will be the country’s first targeting cryptocurrencies. Back in December, Moiseev suggested that mining bitcoin and other cryptocurrencies could be made illegal, though he quickly back-tracked from those comments.
The new owner of the power stations, businessman Aleksey Kolesnik, has indirectly confirmed the acquisition – though he added that he will wait to begin mining cryptocurrencies from the facilities until after Russia adopts the relevant legislation.
Furthermore, the Russian government and its state-owned energy companies have reportedly considered launching a digital currency that could be used in partnership with Venezuela, Iran and Russia to circumvent US sanctions in accepting payment for their oil exports, similar to Venezuela’s Petro, an oil-backed digital currency that is being developed by Latin America’s favorite Socialist Paradise.
Russia offers several advantages for bitcoin miners: For example, its excess power capacity is substantial.
“Russia has 20 gigawatts of excess power capacity, with consumer electricity prices as low as 80 kopeks (1.3 cents) per kilowatt hour, which is less than in China, RMC said in the presentation.«
The company plans to build its own mining hardware using computer chips designed in Russia.
“RMC plans to use semiconductor chips designed in Russia for use in satellites to minimize power consumption in computers for crypto-mining, Putin’s internet ombudsman, Dmitry Marinichev, said at a news conference in Moscow. Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future, Marinichev said, adding that $10 million from the proceeds of the ICO may be spent developing the processors.”
Though, in the beginning, the firm will rely on Bitfury chips. Bitfury, a company that manufactures mining equipment and also operates its own mining operations, was founded by Valery Vavilov, a Russian-speaking native of Latvia.
“The company initially plans to locate mining computers based on Bitfury chips in individual Russian households to challenge Bitmain by using Russia’s lower power prices.”
Already, at least one Russian government entity is experimenting with blockchain tech. The Central Bank of Russia has already deployed an Ethereum-based blockchain as a pilot project to process online payments and verify customer data with lenders including Sberbank PJSC.
The vote of confidence from a close Putin associate has helped lift the bitcoin price to all-time highs, according to data from CryptoCompare.