Russian Cryptocurrency Mines are using Siberia and Soviet InfrastructureSeptember 3, 2019
In what seems like a page straight from a good science fiction novel, a series of Russian crypto mining companies began working in the desolate soviet industrial landscape of Siberia. It is hard to imagine a sight that is more appropriate to the downfall of the Soviet dream (apart maybe from Chernobyl disaster). Yet, in these industrial sites located in the bleak open spaces in the frozen north, a group of entrepreneurs found what is arguably one of the best locations for crypto mining.
While this is great news for the same company it also shows an interesting trend that was made possible by super-advanced technology and the changing economic landscape of the world. At the same time behind this development, there are many additional interesting facts that show this as something more than an interesting local news report.
Bratsky Hydroelectric Power Plant
The Bratsk hydroelectric station located in the Eastern Siberia was created during the Cold War. Its purpose was to power the rising needs of the Soviet manufacturing and heavy industry sectors. Today, it is fueling another industry that is very energy-intensive and this is bitcoin mining. In Bratski, several big mining companies created their own offices and set up shop. The appeal is based on two factors. First, the location has a huge hydroelectric plant so the price of electricity is low. The geographical position means that the outside environment is cold, which keeps down the cooling costs of any mine.
Because of this, many believe that Bratsky is just one example of how the ruined infrastructure of the Soviet empire could nurture a completely new and very advanced industry. The potential for this is huge. Soviet economy was oriented towards an enormous industrial project and had a gigantic military sector. When the union broke down a market economy popped up almost overnight in Russia. Because of that, a number of these massive factories had to shut down. In recent years, however, crypto miners found new potential in the same desolate industrial wasteland deep in the cold northern regions of the Russian Federation.
The main attraction for the mining companies is the electric power, more precisely its abundance and its price. In many parts of Russia, the surplus of electric energy is substantial. This came about with the closure of the Soviet plants and the huge part they had in the energy consumption when the power plants were designed and built. At the same time, the energy consumption of the general population and the remaining industries in the same regions became a lot more efficient over the previous decades. Eletro.Farm is one of the crypto companies taking up this opportunity.
Its CEO Dmitry Ozersky talked about the company’s mine facility working in a former large industrial complex in Kazakhstan. He estimates that the bitcoin mining facilities across the same region, spanning Russia and other former Soviet states have a sum capacity of 600 megawatts. This is almost 7 percent of the sum total of 7 gigawatts of power that the entire bitcoin network. The single biggest producer of hashing power is China. It, according to a report from the Coinshares, produces about 60 percent of the entire network.
The famously cold and barren region of the Russian Federation is not without its industries. Currently, wood and metal are among the biggest ones, but so is petroleum and other traditionally heavy branches of industry. Yet, the plants that were closed did not vanish from the face of the earth. They left buildings, lands and most importantly, power infrastructure. The rugged and practical soviet building mentality might do not consider too much of the aesthetics of their creations, but they made things to last.
Even the impact of the previous 30 years is not critical for the crypto mining industry which employs a relatively small amount of people. In that business, it is all about power and cooling and Siberia, along with its grandiose Soviet infrastructure that is now abandoned and unused, has both. Even now, the mining potential of 7 percent of the network means that this region is a hub of hashing power. It could become much more than that in the years to come if the conditions remain this favorable.
In many ways, the cooling factor is as important as the low price of power and its abundance. With accessible cooling, a crypto mine gets two big benefits. First one is the savings on the additional power needed to go into artificial cooling. The second is the need to design or reuse spaces that are much less energy-efficient and avoid having to install and maintain a complicated cooling system. Natural external cooling allows the whole setup to be practically passive – the heat from the interior is conducted outside and that is pretty much it.
In Bratsky region, the hot season – which is a period of the year when the temperature does not go below freezing – lasts only four to five months each year. During that time, the average temperature is about 15 degrees of Celsius. That is completely feasible even for huge mining companies that produce a large amount of heat byproduct. A system for ventilation would, in theory, be enough to distribute the heat even in the warm days. During the cold season, the cooling is taken care of itself by a procedure that is likely not much more complicated than opening the front door.
A chance for an Industry
Russia always had a turbulent disposition towards cryptocurrency. The same applies to the central government and local ones as well. Like esports and many other novel industries, crypto mining is not something many immediately understand or want nearby.
However, the Siberian regions are in a dire need for development. After decades of seeing their old industry crumble to pieces, a chance to use some of it and see money come with the mining company is a huge chance. This is especially true for additional jobs that will come with the same industry. It is likely that many regions like Bratsky will look for ways to make this happen for them as well.