A surplus of cheap hydroelectricity is the cryptocurrency miner’s dream, and nowhere is this more abundant than in the former Soviet industrial powerhouse cities of Eastern Siberia.
Following the collapse of Soviet Russia many of the military-focused industries of the region began their decline. These cities were centred around an infrastructure built upon hydroelectric power and, without the industry to feed, their future also looked doomed.
But in the past few years the energy intensive cryptocurrency mining industry has set up camp in the region to take advantage – not only of the plentiful supply of cheap power, but also of the sub-arctic temperatures that provide natural, free cooling for the equipment.
Coindesk Investigation
A Coindesk investigation, published on Tuesday, evokes a new, multinational industry already established in the region.
The city of Bratsk is now home to several mining companies. Among them is BitRiver, which describes itself as the largest data in Russia with a total capacity of 100 megawatts per hour (MW/h) of electricity and provides services to miners in the Irkutsk region, as well operating a large mining facility of its own.
The power is provided by the Bratsk hydroelectric power station five miles away and, according to BitRiver’s presentation video, it has been permanently allocated its 100 MW/h of power. It adds:
The local authorities support the project as it creates new jobs and attracts investment in this, otherwise, depressed region.
Meanwhile, the crypto mining industry is also taking advantage of a light-touch regulatory approach, as there are – as yet – no federal laws that oversee the sector and miners need no permissions or special licences.
Cheap Power Providers
This region of Russia ranks among the most inexpensive for power in the world – joint third alongside Iran and behind Venezuela and Iceland.
Chart compiled by BitRiver
Indeed, Iceland, Iran and Venezuela also have vibrant cryptocurrency operations thanks to the cheap supplies of power in their countries.
Iceland is home to Genesis, one of the world’s leading bitcoin mining operations, making use of the country’s cheap geothermal energy at its headquarters in Keflavik, a former US Air Force base.
Crypto miners in Iran have been making use of government subsidized electricity, but the authorities have recently cracked down on its use by the industry and intends setting corporate rates for miners. In Venezuela too, miners make the most of heavily subsidized power costs.
In both Iran and Venezuela, the authorities appear to be catching on to abuses of the subsidy system. While still cheap, costs are likely to rise. In Iceland, the main risk is that the government will regulate or tax the industry to ensure it pays more than household rates.
While the light touch remains in Irkutsk, the greater the rate at which the Siberian region is being exploited by the crypto mining industry, the greater the risk the authorities that run the utilities it needs will spot a revenue stream waiting to be tapped.
