Recently, a study was conducted by the Russian Association of Blockchain and Cryptocurrency (RACIB) to determine the best location for crypto mining in Russia. According to Bitcoin.com: “This association was formed to unite blockchain participants as well as owners, miners, and investors of cryptocurrencies and initial coin offerings (ICOs).”
The study found that the Krasnoyarsk region was the most favorable location for crypto mining. However, Krasnoyarsk is not the region with the cheapest electricity in the country–electricity in the Krasnoyarsk region costs approximately 2.4 rubles, or about US$0.04, per kW/h, while the nearby Khakassia and Irkutsk regions have electricity available for between 2.01 and 2.14 rubles.
Rather, the designation of Krasnoyarsk as the most favorable region for crypto mining also comes from the region’s capabilities for logistics and telecommunications. “The association compared the regions by such parameters as the cost of electricity, the availability of free reserve capacities, logistics accessibility and the development of telecommunications infrastructure,” said Yuri Pripachkin, president of the RACIB.
The region’s position as a major hub for transportation and distribution also make mining conditions particularly keen. Pripachkin added, however, that “despite favorable conditions, almost no one is engaged in mining in the Krasnoyarsk Territory.” On the contrary, “the main farms in Russia are located in Moscow, Leningrad, Novosibirsk, Irkutsk, Sverdlovsk, Tomsk, Chelyabinsk, and Tatarstan.”
Russia and Crypto in the (Very) Recent Past
If Russia was dating cryptocurrency, it could be said that their relationship was complicated.
In October, Russian President Vladimir Putin officially called for the creation of the CryptoRuble, a national cryptocurrency that would ensure crypto users were paying taxes on money earned from investing in the coin. The CryptoRuble will be the “only cryptocurrency legal to use for Russian citizens,” according to a Daily Mail Report.
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Russia had long held cryptocurrency in a rather unfriendly regard, but the government really began to pick up steam against crypto in early September, when the country announced that it would be banning the sale of cryptocurrency to “ordinary people”. At the time, Alexey Moiseev, Russia’s Deputy financial Minister, said that it was “hard to argue [that] cryptocurrency is not a pyramid scheme,” although “qualified” investors would still be allowed to trade in crypto markets.
Just a few weeks later, however, it was announced that Russia was in the process of drafting a set of laws that would merely regulate the use of crypto, rather than outlawing them outright. At the time (mid-September of 2017), Russian finance minister Anton Siluanov said at the Moscow Financial Forum that “the state understands indeed that cryptocurrencies are real… There is no sense in banning them, there is a need to regulate them.”
On Again, Off Again
Unfortunately, this ‘balanced’ approach to handling cryptocurrency was rather short-lived. In mid-October, Sergei Shvetsov, the First Deputy Director of the Russian Central Bank, announced that the Russian government would begin restricting access to online cryptocurrency exchanges, adding that the Russian government “think[s] that [cryptocurrency] is a pyramid scheme,” echoing Alexey Moiseev’s September sentiments.
The exact date of the start of the ban is unknown. Luckily (for the rest of the world), Russian cryptocurrency trading accounts for such a small portion of the market that the price of Bitcoin was essentially unaffected by the announcement of Russia’s ban; in fact, the announcement of the ban coincided with the rise of Bitcoin to over US$5000–a new record at the time.
Despite the confusion regarding the trading of cryptocurrency, crypto mining seems to be a welcome venture in Russia. Bitcoin.com recently reported that the governor of Russia’s Leningrad region extended an open invitation to cryptocurrency miners to set up “mining farms” in the region’s new technopark. Additionally, the RACIB recently reported that 40 companies located across the EU and in China have taken steps to apply for the right to mine Bitcoin in Russia.
If these companies are indeed granted the right to mine Bitcoin in Russia, it’s not so hard to imagine that Russia could once again consider a less extreme approach to the regulation of cryptocurrency trading. However, the future is uncertain; only time will tell.