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Russia Prepares for Large-Scale Bitcoin Mining Operation Following Minery Launch

May 15, 2018 - Comment

With digital currency gaining in popularity worldwide, additional mining operations and farms have started to appear despite looming bans on the practice. Understanding The Ban While many see bans on crypto mining as a hindrance to entrepreneurship and the crypto space, in actuality, it’s an effort to protect and enhance cities, states, and countries’ natural, historic, cultural,



With digital currency gaining in popularity worldwide, additional mining operations and farms have started to appear despite looming bans on the practice.

Understanding The Ban

While many see bans on crypto mining as a hindrance to entrepreneurship and the crypto space, in actuality, it’s an effort to protect and enhance cities, states, and countries’ natural, historic, cultural, and electrical resources.

Back in March, a moratorium was enacted in Plattsburgh, New York, the first major U.S. city to pause any and all mining operations due to an operation that had nearly drained the city of its electrical resources, at the expense of the residents who were the ones paying for it. Plattsburgh’s ban stated that it would issue a penalty of up to $1,000/day on any firm, person, corporation, or other entity that established or ran a commercial cryptocurrency mining operation once the ban went into effect.

Why Is Russia a ‘Hot Spot’ For Mining?

For its part, Russia will soon become home to one of the largest legal mining operations in the world, located in Siberia. Earlier this year, the Bank of Russia, Russia’s central bank, offered to allow the mining of cryptocurrencies, but proposed that miners sell their coins outside the country. The first deputy governor of the bank emphasized the need to take a “taxation point of view” and consider how it can be controlled and reported. However, selling cryptocurrencies outside the country doesn’t remove the requirement that miners file and pay their taxes.

One company, Minery, recently announced that it intends to establish five mining complexes with a total capacity of 55 megawatts on a 59,000 square foot site within the Irkutsk region. It has partnered with Bratsk Electric Grid Company JSC, a regional power supplier.

The company is considered a ‘turnkey’ mining solution, providing all necessary hardware, installation, and configuration. In the event of any service needs or breakdowns, the company makes the necessary repairs on the spot. This type of operation comes in handy when engaging in contracts with cloud mining providers, mining pools, or third-party hosting platforms. Operating at the lowest electricity rates, it’s still considered legal in light of the policies proposed by the Russian Federation and Bank.

Russia’s energy resources and climate make for some of the best conditions for crypto mining. Consequently, more than 1.5 million Russians have started to engage in solo mining (home mining). Doing so comes with great risks, as this method of operation tends to cause an annoyance and nuisance to those around, not to mention safety hazards. Oftentimes, these operations are operating illegally, and rather than providing value to communities, they are draining them.

For example, many illegal mining farms are closed and those behind them are arrested. Why? Well, you have (1) individuals stealing electricity that belongs to a designated area and those who pay money for it, (2) the land and premises being used for other purposes at the expense of area residents, and (3) equipment being smuggled across state lines and international borders.

“Having been mining since 2016, we have encountered restrictions [on] home mining, and came up with a solution in terms of scalability and legal operations,” says Ilya Bruman, co-founder and CEO of Minery. “The idea is to build a comprehensive infrastructure, providing highly-efficient, powerful, and a stable electricity supply for our investors, ensuring smooth operation of their mining businesses.”

Under Russia’s proposed regulations, the majority of such businesses will become illegal. Minery is not among them.

Staying Within The Volts

The biggest issue with many of the mining operations that are later deemed illegal is that the electricity being used is done so without authorization—often draining cities and towns of this highly used and profitable resource. It’s even gone digital, in the case of cryptojacking malware which attacks computers and servers, draining their CPU power and resources.

Minery’s mining complexes are located in several cities in the Irkutsk (Siberia) region – Bratsk, Irkutsk and Ust-Ilimsk. The local climate conditions – the average annual temperature is 28.4° Fahrenheit, or -2° Celsius – are optimal for miners’ heat transfer and cooling systems, which reduces hosting expenses. The project relies on renewable electricity from high-pressure hydroelectric power plants – the Bratsk, Irkutsk, and Ust-Ilimsk Hydroelectric Power Stations. The plants are located on the Angara River, which drains Lake Baikal – the largest freshwater lake in the world.

To ensure optimal working conditions, any mining operation should reduce energy costs while maintaining the equipment itself. “This goal is achieved by placing mining facilities near the sources of the cheapest and most eco-friendly electricity – hydroelectric power stations,” says Alexei Paikin, co-founder and managing director of Minery. “This approach minimizes the cost of delivering electricity to the point of consumption.”



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