Siberian gold: how Siberia became the mining center of Russia

In February, Russia has ranked among the best countries for mining, along with Canada, Switzerland, China and Iceland. The conditions for mining and sale of cryptocurrencies in Russia is not perfect: there is no clear legislative regulation of the sector, and electricity prices vary widely depending on the regions.

However, for many indicators, Russia was ahead of many other countries, and experienced miners know how to benefit from these advantages.

General conditions effective mining

The success and profitability of the mining of cryptocurrencies depends on a large number of indicators. First, you need to understand that mining is not only the process of cryptocurrency mining, but also the maintenance of the system including verification of the units. Second, the bitcoin mining cost so «network» is much more expensive than mining other cryptocoins: according to Bloomberg statistics, by the end of 2017, the demand for electricity among miners of bitcoin rose to 20.5 TWh/h, for comparison, the annual power consumption of Denmark – 33 TW/h And the Ethereum miners now spend more electricity than it consumes the entire island of Cyprus.

Given the rise in electricity prices and the need to purchase expensive equipment, the cost of production cheapened in recent months, bitcoin pays off more slowly. If the current rate of growth, in 2020 when mining will consume power the same as now consumed worldwide, according to the research team from Digiconomist.

In addition, other factors. In the above-mentioned rating Bloomberg in addition to the cost of electricity was estimated ease of doing business, the availability of renewable resources, the average speed of the Internet and the average annual air temperature. For example, in Iceland, the miners can use 100% renewable resources and the cheapest electricity – about $35 per mW*h, which makes mining more profitable. And here was the worst indicators in Australia: here to mine digital money is very expensive – the cost of electricity is $129 per MWh and very hot as the average temperature is equal to 22.5 degrees Celsius. Also among the countries with the most expensive electricity was Uganda, Japan and the UK.

As for Russia, despite the relatively low cost of electricity — $47.47 per mW*h (4-th place in the rating) and cold climate (annual average temperature is -3.7 degrees Celsius — colder only in Canada with the rate of -4.9 degrees), at an average Internet speed of 37 Mbps, it was only in 11th place, and the presence of renewable resources (18%) on 13-m. thus, according to the world Bank, Russia occupies the 35th place in the ranking of countries for ease of doing business.

Anyway, these factors make Russia an attractive country from the point of view of those entrepreneurs who want to capitalize on the mining of cryptocurrencies. While mining is a «grey» legal and tax area, and not regulated, it will remain a profitable activity. And renewable resources with the demands of security here, unfortunately, almost nobody takes into account. But low temperatures and electricity prices have made the individual cities and regions capitals of mining.

Mining in Russian

According to the research, RAKIB, main farms in Russia located in Moscow, Moscow region, Leningrad, Novosibirsk, Irkutsk, Sverdlovsk, Tomsk and Chelyabinsk regions and in the Republic of Tatarstan, but the best place for mining – Krasnoyarsk Krai.

Siberia in General, along with China, Iceland and Switzerland over the last few years has become one of the world’s major centers of cryptocurrency industry, as these regions represent a surplus of electricity. Entrepreneurs create a full mining farm mining for digital gold on an industrial scale.

Moscow became the leader of this movement for obvious reasons: despite the relatively high cost of electricity in the Metropolitan area, there is accumulated all of the most actively developing IT-companies and professionals interested in new technologies, including cryptocurrencies, Baccano and opportunities of mining. But the Siberian regions were in the forefront of this movement thanks to its climate and cheap electricity.

Held in early April, the Krasnoyarsk economic forum once again showed how important the issues of mining and crypto-currencies for the region: the forum was announced that in the town of Divnogorsk of Krasnoyarsk region on the basis of industrial Park «Brave» it is planned to create Russia’s largest mining farm mining cryptocurrency. Inside Technopark from the beginning of spring is the construction of the units mining farm. In the near future it is planned to run the farm with a capacity of 10 MW, then the capacity will increase to 120 MW. The heat which will be generated by mining cryptocurrencies when the farm will earn in full power, I plan to use for heating homes.

In Tomsk, Kemerovo and Novosibirsk there are regional cryptocurrency community and even schools of cryptocurrencies that promise to teach you to earn mining and cryptocurrency trading. In the Internet you can find a huge number of forums and public servers, where you can buy mining hardware. Online courses and video instructions for assembling your farm even more. From Irkutsk miners got your telegram channel in which more than 500 people, actively discussing current problems of cryptomeria and parallel to selling the hardware at a reasonable price.

In 2016, an engineer from Irkutsk Yury Dromashko sold the apartment and took the credit, and the proceeds bought ASIC miners and built a farm for bitcoin mining. In the summer of 2017 Dromashko gave a lot of interviews, calling himself neither more nor less «official representative
Satoshi Nakamoto (Creator of bitcoin) to Siberia», while promoting their YouTube channel. Profit he did not disclose, but said that the consumption energy consumed by the computers — 2.5 MW, which approximately equals the needs of 10 000 average Russian apartments, and claimed that his farm is not the biggest in Irkutsk.

However, in most cases, the entrepreneurs who are engaged in mining, don’t do self-promotion and not very active tell us about yourself in the media. While the regulation of cryptocurrencies and mining remain unresolved, the miners will to escape: first, there is a risk that after the introduction of the regulation they will be outlawed, and secondly — most often computer geeks that don’t like light and are not engaged in self-promotion, and in the third — the racket has not been canceled, and the chance that the farm will simply be taken away, is also quite large.

On 25 January, the Ministry of Finance proposed a draft Federal law «On digital of financial assets», which at the moment remains the only Russian in the cryptocurrency sphere. The new draft law the Ministry of Finance for the first time gave definition of basic concepts related to digital assets, including crypto-currencies, token, mining and ICO.

«Digital financial assets are not legal tender in the territory of the Russian Federation», — emphasized in the bill, and mining was defined as «entrepreneurial activity aimed at the creation of cryptocurrencies and/or validation for the purpose of receiving compensation in the form of cryptocurrency» and is taxable. However, common definitions of these concepts, it is not moved: that the cryptocurrency sphere functioned should not be one bill, but a whole range of economic regulatory measures.

In the meantime, waiting for «doomsday», when mining will become regulated or will be deemed illegal without a special permit, the miners are trying to remain inconspicuous. Most often they are reported on the news about another fire due to a lack of safety in mining. For example, in February in Tomsk burned apartment in a residential house on the street Designers. The cause of the fire was the mining hardware that has been used with violations of fire safety rules.

Due to the fact that to do mining farm in the apartments was simply dangerous, enterprising cryptocurrency enthusiasts began to create mining-hotels. However, the most widespread they received in the Central regions – Moscow, St. Petersburg and Kazan, while in the regions miners continue to mine cryptocurrency «at home».

Risks and factors of efficiency of mining in the «home»

Of course, electricity prices played a decisive role in the development of mining industry in Siberia. Thus, the cost of kWh in Moscow is on average from 4 to 6 rubles per day (depending on the rates of payment) and from 1.2 to 1.9 of the ruble in the night. While in Krasnoyarsk region the cost of electricity in the day time starts from 1.66 — 2.37 rubles (depending on rates), and in Irkutsk — from 1.01 rubles. While in Moscow to «hide» a powerful mining farm is difficult — not only in electricity but also in density housing and rental prices in specially equipped areas on the Siberian expanses, to engage in such «gray» business is not only cheaper, but easier, and the farm can be arranged even on your own plot of land and not in an apartment high-rise building.

It is clear that the larger the farm is, the more electricity it consumes, but also the greater the heat, making, mining in the home occupation are not only comfortable, but also dangerous. Since the beginning of cryptocurrency fever in the middle of 2017 the media regularly wrote about the fire in the apartments. And it remains one of the main challenges of mining today: any jump of electricity may cause interference with the work of the farm, the amount of electricity consumption continue to grow, and entrepreneurs are trying to save money on cooling equipment, not paying attention to warnings about the possibility of fire.

Today there are a number of solutions for the safe and efficient mining. Services that are engaged in the sale and installation of mining equipment and offer services for setting up farms and cleaning of interface, and developers can create additional solutions for equipment protection due to power fluctuations and energy saving technologies to reduce costs. For example, energy saving device EnesFilter with an automatic shut-off of power supply can reduce monthly costs for electricity consumption up to 40%, reduce the rate of wear and increase the service life of the equipment several times, minimizing thus the risk of accidents on the network.

Today in the world there are more and more companies offering solutions in the field of «green» mining, for example HydroMiner operating on the basis of two hydroelectric power plants in the Austrian Alps, or the American company NastyMining from Arizona, which uses solar power and wind power for bitcoin mining.

In Russia, particularly in Siberia, there are a huge number of natural sources of energy, so making mining not only safe and relatively cheap, but also eco-efficient — that is the question that needs to be addressed. This opens up tremendous opportunities for those who want to engage in mining, the benefit of Russia there are all the necessary.

Article to gave Yang Kaufmann, CEO and co-founder of the platform for energy management NS.

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