A bitcoin mining company from Russia is planning to open a new mining facility to corner 20 percent of the entire international market. The Russian Mining Company (RMC) wants to repurpose an old metal factory in the north of the country, according to Russian news outlet RBC. Interestingly the mining company is run by government official and internet ombudsman Dmitry Marinichev.
Marinichev wants to provide services in crypto mining or in the computing power for the development of artificial intelligence. In addition the Russian businessman wants to restart his mining business, after shutting it down earlier this year. This time around his business will become decentralized and distributed, so he will be able to scale up or down according to his needs.
The plans of the Russian Mining Company don’t have a direct relationship with the Russian government. However, Marinichev is a government official and a businessman. In addition he’s also very pro-blockchain and decentralization, based on his earlier remarks about internet censorship and Russia’s attempts to block Telegram.
101 million dollar per month in bitcoin
If the Russian internet ombudsman is really able to acquire 20 percent of the worldwide mining power, then his business will get 10.800 BTC per month. At the current rate that would be more than 101 million dollars. Keep in mind, this calculation doesn’t consider the Bitcoin halving that will happen in April or May next year.
Bitcoin mining in Russia already accounts for 10 percent of the total power of the Bitcoin network. This requires 600 megawatts of electricity, according to Dmitry Ozersky from Eletro.Farm in an interview with Coindesk. That would mean that Marinichev needs at least 1200 megawatts of power, and probably even more.
20% is not really realistic
At the moment BitcoinRussia is one of the biggest Russian mining groups. However, they are responsible for only 1.5 percent of all the bitcoins mined. That’s one of the reasons why Yuri Pripachkin from the Russian Association of Cryptoeconomics and Blockchain (RACIB) doubts whether Marinichev’s can fulfill his ambitions. Pripachkin told RBC that electricity prices might be an issue, and there are already a lot a major players in the market who would not allow such a monopoly. Because of this the researcher believes Marinichev should aim for 5 to 7 percent.
All around the world major mining farms are popping up. For example, in June this year Ploutin Mining from the United States announced that it would build the biggest solar-powered bitcoin mining farm in the country. They will produce 10 to 13 megawatt of electricity per day with their farm in the Western Mojave desert.
In addition Chinese mining giant Bitmain opened a 50MW cryptocurrency mining farm in Rockdale, Texas. This mining facility will buy power from the local electricity company though. Bitmain has plans to expand this facility later. They are thinking about a 300MW facility, which would be one of the biggest in the world.
Old Sovjet factories reborn as mining farms
Marinichev’s plans to give an old factory a new purpose doesn’t stand on its own. All across Russia old factories are now bitcoin mining farms. Hydropower plants in Siberia are now attracting cryptocurrency miners. These locations can use cheap electricity from the hydropower plant. In the same way solar and wind power are cheap ways to get electricity.
The electricity from the hydro plants in Siberia is among the cheapest in the world. It’s estimated to be around $0.04 per Kw/h. This is about half of the standard price in Russia.
The Bitcoin network requires lots of energy to run its mining business. According to research from CoinShares approximately 74 percent of the required energy comes from green power sources. Many mining businesses run their mining operations on solar, wind or hydra power. For example, the rain season in China is considered to be a good opportunity for miners. Hydro power creates a tremendous surplus of electricity, which means that electricity is cheap during that time of the year.
Bitcoin network stronger than ever
Renewed interest in bitcoin mining has made the Bitcoin network stronger than ever before. In September the network has a record amount of computing power backing it. The Bitcoin blockchain is now powered by more than 100 exa-hashes per second. In other words, that’s 100.000.000.000.000.000.000 calculations per second.
Miners earn rewards for verifying transactions. These transactions are combined into a block. In each block miners find 12.5 BTC, which equals roughly 159 thousand dollars. Next year, approximately in April, the Bitcoin halving will occur. This means the rewards will get smaller. This creates scarcity and because of this the price of bitcoin generally goes up.
Also published on Medium.