According to Vedomosti, the Russian-language business daily published in Moscow, major companies operating power plants in the country are leasing excess energy capacity to cryptocurrency miners. This move is being hailed as a boost for crypto miners who are seeing their electricity bills consume a significant proportion of their profits.
In a public statement quoted by the daily, a EuroSibEnergo representative said:
“There are over 70 manufacturing facilities with ready-made infrastructure, including quick access to electrical grids and substations, provided with cheap electric power.”
These energy providers are “in talks” with scores of miners seeking to capitalize off of cheap electricity prices. And like the miners, state leaders want to use Russia’s more affordable energy rates to ensure greater competitiveness with China.
Currently around half of all global Bitcoin’s mining power is generated in China, making the country the epicenter for cryptocurrencies. Given the country’s vast stores of renewable energy, the cost of electricity for machines is considerably lower, making it a favorable local for starting a digital mining enterprise.
Chinese power is either delivered via hydroelectricity or financed by the state. This allows miners there to outlast competitors in less profitable parts of the world.
According to a report by the business publication Bloomberg, Russia has 20 gigawatts of excess power capacity, allowing for consumer electricity rates as low as 1.3 cents (80 kopeks) per kilowatt hour. With rates reportedly less than in China, this surplus may eventually give Russia an edge over China, in terms of cost effective power consumption for Bitcoin mining.
Mining farm owner Timofey Ra has stated that an estimated 30 percent of Bitcoin mining expenses goes to paying electricity bills. He notes that a number of miners have stated their intentions to start farms at electrical grids and had already agreed on preferential terms.
Growing Crypto Interest In Russia
These mining energy developments come as digital currencies are attracting lots of attention and interest in Russia. There are reports that the country is moving quickly to legitimize digital money, maybe as soon as 2018.
But perhaps the biggest news involves plans to legalize Initial Coin Offerings (ICO’s) in Russia. There are reports that a company co-owned by Russian President Vladimir Putin’s internet ombudsman Dmitry Marinichev is planning to raise as much as $100 million through an ICO, to boost Russian entrepreneurship in order to challenge China’s Bitcoin mining supremacy.
The plan is for the company, Russian Miner Coin (RMC), to issue tokens in exchange for Bitcoin and Ethereum, with funds used to build mining infrastructure in Russia. Token holders reportedly will have the rights to 18 percent of the revenue generated by the company’s mining equipment.
In the end, the success of these developments are all tied to cheap energy for mining, a course with which Russia appears to be making steady progress.