For the first time, Russian private investors bought two small power plants to create a data center and a farm for mining cryptocurrency. The first asset is Kizelovskaya GRES, which is located in Perm region and has a capacity of 23.6 MW, and the second – Sarapul CHP in Udmurtia, with a capacity of 10 MW. “Forpost" found out whether this means that the law regulating this sphere will soon be adopted in Russia, and whether the creation of “cryptoruble” and the cryptocurrency trading at official markets will be possible.
2017 was a turning point in the issue of legalization of the cryptocurrency system. Moreover, one by one, many states decided to create national electronic money systems, fearing to "fall out" of the race for the title of "the most dynamic modern economy".
The market of cryptocurrencies today is equal in capitalisation to such companies as the Japanese network provider NTT Docomo, the oilfield services company Schlumberger, the Royal Bank of Canada, and the Japanese telecommunication carrier Nippon Telegraph. In Dubai, for example, state cryptocurrency has already been launched, and blockchain technology is planned to be used in all state structures by 2020.
IBM expects that 65% of top banks will start using blockchain technology during the next two years. It is already used in bond transfers, money transfers, payment processes and trading platforms. Transactions are processed quickly, safely and more cost-effective.
The Central Bank of Russia is also ready to use blockchain technologies to provide financial services, however, the legalization of already existing cryptocurrencies is considered inexpedient.
"After a very thoughtful analysis, we realized that this technology can bring additional benefits to society, the financial system, and the companies. Therefore, now we are testing it jointly with banks," said in October 2017, Olga Skorobogatova, the First Deputy Governor of the Central Bank.
Now the Central Bank, within the framework of the FinTech Association, is developing four blockchain projects in cooperation with other banks: “Know Your Customer”, the mortgage programs, programs with digital accreditation and bank guarantees.
Last year President of Russia, Vladimir Putin instructed the government and the Bank of Russia to prepare amendments to the legislation of mining, placement of cryptocurrencies, and determining the status of digital technologies used in the financial sphere. At the same time, he said that the ministry should proceed with "the ruble obligation being the only legal means of payment in the Russian Federation".
"The Central Bank behaves conservatively, but in my opinion, this conservatism still has grounds. It is known that the cryptocurrency is supported by nothing. In some situations, it can be used as means of payment. But not for savings. Fluctuations are enormous: today you are enriched, but tomorrow you will lose everything. Considering the case with hoodwinked investors, we can not allow the reoccurrence of the same situation, only with cryptocurrencies. How many times have they said: do not invest in currency mortgages? But when it happened, people still forgot about it,” – Vladimir Putin commented on the future of digital money in Russia during the meeting with the domestic media leaders on January 11. The President also emphasized that it is necessary to introduce regulations into this sphere.
World bitcoin mining is now spending 22.5 billion kW/h of electricity per year, which is 40 times more than used for operating the Visa system. It’s equivalent to 13.24 million barrels of oil necessary to generate this amount of energy. If 12.5 bitcoins are mined every 10 minutes, then the "cost of production" of each bitcoin is an average of 20 barrels of oil.
One who can minimize the consumption of electricity during mining or do it at a lower price, of course, gets competitive advantage. Many Russians who assemble home farms and mine bitcoins using a relatively small number of video cards solve this issue quite simply – they connect the equipment to the communal electrical power units. Thus, they minimize their expenses, putting them onto neighbors and the managing company.
Major players who mine on an industrial scale, of course, can not afford such behavior. The solution here is to move the mining facilities to the regions of Russia that are most favorable for that.
"The Leningrad region today produces almost twice as much electricity as it consumes," said former Vice-Governor of Leningrad region, economist Grigory Dvas. – This, of course, is a serious competitive advantage, as we can locate power-consuming industries in the region. However, if previously, in the industrial age, we talked about the pulp-and-paper processing, wood processing, metallurgy, heavy engineering, today we can build enterprises related to the digital economy without giving up on past industries. This applies to data centers, mining farms and so on. For example, a serious mining center needs a capacity of approximately 50 MW. This is quite comparable to a good pulp-and-paper plant."
In general, our country has unique opportunities for the development of industrial mining of cryptocurrency. Low temperatures in most of the territory, as well as relatively cheap electricity prices, allow to obtain competitive advantages in this area. The oil and gas complex may be the most attractive for mining. An arrangement of computing facilities for obtaining digital money on its production premises promises to become a significant source of profit.
Today, investors are in a waiting state. After all, we will be able to talk seriously about large investments in infrastructure only after the adoption of a corresponding law. The owners of Kizelovskaya GRES and Sarapul CHP are planning to create data centers based on purchased power stations soon, while mining is postponed to near future due to lack of legal clarity.
Anyways, the intensity of global cryptocurrency mining in the coming years will increase annually in proportion to the amount of computer power involved in the process. According to the forecasts of many experts, Russia will not remain on the sidelines – national legislation will allow official possession of digital money, although it will be possible to buy and sell it only in specially designated areas. It is expected that work on the document that governs the laws of the trade will be completed in upcoming six months.
According to experts, such legislation development will contribute to the economic growth of the country, although, possibly provoking a shortage of energy resources and increase in prices of hydrocarbon raw materials. Therefore, the main task of the mining industry in the coming years will be to create innovative technologies that will reduce computer energy consumption when mining.
