Russia Launches $100 Million Bitcoin-Mining Operation

In what some have called a “watershed” moment for bitcoin, Bloomberg reports that a company co-owned by an aide to Russian President Vladimir Putin is seeking to expand Russia’s bitcoin-mining industry, leveraging Russia's cheap energy to rival China as the world’s largest mining market.

The company, known as Russian Miner Coin, or RMC, is seeking to raise $100 million in an initial coin offering, promising buyers a right to 18% of the company’s mining revenue, according to a presentation cited by Bloomberg.

“Russian Miner Coin is holding a so-called initial coin offering, where investors will use units of Ethereum or bitcoin to buy new RMC tokens. These new tokens will have rights to 18 percent of the revenue earned with the company’s mining equipment, according to a presentation posted on its website.”

According to Brian Kelly, a frequent CNBC contributor, the announcement is a “watershed” development in the history of bitcoin because it suggests that Putin recognizes the value of the pioneering digital currency as a reserve asset. The Russian president has already expressed an interest in blockchain technology – particularly Ethereum. In June, he met with Ethereum founder Vitalik Buterin on the sidelines of the St. Petersburg Economic Forum and offered his support for Buterin’s plans to help local partners adopt the technology in Russia.

Russia offers several advantages for bitcoin miners: For example, its excess power capacity is substantial.

“Russia has 20 gigawatts of excess power capacity, with consumer electricity prices as low as 80 kopeks (1.3 cents) per kilowatt hour, which is less than in China, RMC said in the presentation."

The company plans to build its own mining hardware using computer chips designed in Russia.

“RMC plans to use semiconductor chips designed in Russia for use in satellites to minimize power consumption in computers for crypto-mining, Putin’s internet ombudsman, Dmitry Marinichev, said at a news conference in Moscow. Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future, Marinichev said, adding that $10 million from the proceeds of the ICO may be spent developing the processors.”

Though, in the beginning, the firm will rely on Bitfury chips. Bitfury, a company that manufactures mining equipment and also operates its own mining operations, was founded by Valery Vavilov, a Russian-speaking native of Latvia.

The company initially plans to locate mining computers based on Bitfury chips in individual Russian households to challenge Bitmain by using Russia’s lower power prices.”

Already, at least one Russian government entity is experimenting with blockchain tech. The Central Bank of Russia has already deployed an Ethereum-based blockchain as a pilot project to process online payments and verify customer data with lenders including Sberbank PJSC.

The vote of confidence from a close Putin associate has helped lift the bitcoin price to all-time highs, according to data from CryptoCompare.

 


 

Comments

giovanni_f ACP Wed, 08/09/2017 - 03:19 Permalink

"co-owned by one of Putins internet advisers". "Co-owned", "one of", "internet advisors" - no matter how weak and soft the link to Vlad the Great - it is RUSSIA, not just a simple fucking start-up, albeit well connected. In other words, Putin is at it again.Do we ever read headlines like "US opens a mine, owened by a Clinton friend" when one of the Giustra clan members commits to a new resource bet?  Just an example, just asking.

In reply to by ACP

Oh regional Indian giovanni_f Wed, 08/09/2017 - 03:25 Permalink

Think of headlines like this as signalling.Could serfs have ever entered the fiat game post 1913? Not a trick question, answer of course is never. Fiat was/is tightly controlled, felony the world over to re-print etc.This is the brave new world. Love it/hate it, the signalling is that it is coming and the smartest slaves are being given an opportunity to stand up and be counted in the process.You can own mines outright, mine your own currency directly. Kind of wild westish when you think about it. So, sit out and moan or get in, at least get your feet wet. Think also of how much money (fiat) has been funneled into hands and minds that worked out the concept of derivative value based primarily on fiat valuations of anything and everything.For genuinely creative minds, this is open season.... stack, store (especially silver) but don't deny the obvious....it's being smashed in our faces everyday....remember fonestar....  

In reply to by giovanni_f

East Indian Oh regional Indian Wed, 08/09/2017 - 04:44 Permalink

I still think that Bitcoin's upper ceiling makes it a storage of value rather than a medium of exchange. IMHO, a medium of exchange must possess a certain amount of flexibility in quantum in circulation: during boom times the supply must expand to meet the excess production, and during bust periods it must get out of circulation. Gold fulfilled these functions admirably till the 1920's boom.  Bitcoin may expand, but it will not go down in numbers during a bust period. IMHO, this is an essential quality of money. Normally this should be achieved by lesser purchasing power of same unit, but gold has a contrarian nature here: during depressions, purchasing power of gold increases.  Therefore here we are, mankind has invented something which is available to all for the same amount of work done, nobody can whip it out of their nether hole, which can be exchanged directly like cash, and which threatens the carefully preserved double monopoly: the monopoly of the government to issue legal tender, and the monopoly of the banksters to create money. Wow! I was there in that damned forum, ages ago, when this things was brought out first. I understood the significance. But I never thought I would see its fruition in my life time. Most of use were predicting that Bitcoin would be in demand in 2040!  But I still think a Bancor, which can expand with demand (more individual miners jumping in) and contract (every unit in circulation will get a haircut), where the rate of expansion and contraction are decided not by any fixed rate (Friedman) nor by a Central Bankster, but by demand and supply, is yet to come; and whenever it comes, if it comes without seignorage, it will be the choice currency of international transactions.  I have a clear outline of this crypto; I will be very happy to collaborate with anyone for this. Unfortunately I dont know how to contact members of this forum. Sometime ago a member sent me an invitation, I accepted it, but then nothing happened. I am not able to locate the right corners of this forum where members can chat or discuss.  I am still hopeful. The benefits of Exorbitant privilege have been skimmed off by an unholy combination; now our very own future and liberty are under threat. In my view this is the War of Independence for whole mankind. And I want to do my bit before I am summoned to account for my deeds. 

In reply to by Oh regional Indian

Maestro Maestro East Indian Wed, 08/09/2017 - 07:57 Permalink

"...nobody can whip it out of their nether hole..." You don't know that.  But you talk like you're God Himself and you are sure of what you're saying. Consider: 1. You didn't make the computer you're using to mine, buy and sell bitcoin so you don't have control over it BUT somebody else did make that computer so, by definition, somebody else has control over it.  (Physical ownership or usage does not entail control.)2. You didn't write the software you're using to mine, buy and sell bitcoin so you don't have control over it BUT somebody else did write that software so, by definition, somebody else has control over it. 3. You don't generate the internet so you don't control it but somebody else did and by definition, they control it.  (NSA also comes to mind.)4. You don't even know whether Satoshi Nakamoto is a real person or a group of people, yet you believe that he/they created an ELECTRONIC RECORD BASE aka as blockchain only out of the goodness of their heart without any personal agendas, which supposedly allows "digital information to be distributed but not copied".  How can anything that's distributed remain singular?  By definition, distribution means 'many copies' as opposed to 'only one original'.  Each computer screen is showing a physically nonidentical copy of a piece of electronic information that's assumed to be the same one as the original piece of information continuously modified and generated in a multitude of unknown cyber space-time locations -- the best known example of this process being known as the bitcoin.  How can you value something only for its attribute of being singular when you also know that by definition it is MANY, or of a multitudinous nature?  And if it's many, how do you know how many there is out there?  Especially when you don't control neither the computer nor the software nor the program (aka blockchain) used to create it?  

In reply to by East Indian

Maestro Maestro tmosley Wed, 08/09/2017 - 11:43 Permalink

But I can test the purity of the gold myself, or have it tested by someone I trust.  Impossible to independently test how many bitcoins there are in existence therefore impossible to even speculate about the value of a bitcoin based on actual quantitiy in existence. Jostling arguments with me is going to enlarge your anus.  Every fucking time.   Soon your anus is going to start giving serious competition to a nice tight young twat.

In reply to by tmosley

taipalag East Indian Wed, 08/09/2017 - 07:56 Permalink

"IMHO, a medium of exchange must possess a certain amount of flexibility in quantum in circulation: during boom times the supply must expand to meet the excess production, and during bust periods it must get out of circulation." Bitcoin can be divided up to 8 decimals (Millibitcoin, Microbitcoin, Satoshi). Supply can stay the same and the price can freely fluctuate based on demand/supply. With 8 decimals there is a lot of room to grow.

In reply to by East Indian

TheReplacement East Indian Wed, 08/09/2017 - 09:53 Permalink

Correct me if I'm wrong but the entire scheme relies on miners to mine and also verify transactions.  Since BTC relies on huge asic mining farms that have an energy consumption signature does this not suggest that this is a weakness than can be exploited by .govs to gain control over it?  They can also target exchanges for the same purpose. Take away the miners and the network is too slow to handle transactions in any sort of reasonable fashion.Take control of the miners and increase the transaction fees to the point of confiscation.Take away exchanges and people will have to rely on personal wallets that are simply too complex for the average dolt.Take control of the exchanges and increase the transaction fees to the point of confiscation.Imbed spyware in hardware/OSware for phones and computers and just steal it all.I can keep thinking of ways for .govs with unlimited resources to really muck up cryptos.  Perhaps each can be overcome with some innovation but good luck getting the the public to be patient while you do it.  I think cryptos are like the wild, wild west in a gold rush sort of way.  Get in early, dig up a lode, take your profits, and get out.  If you can't do that then the next best bet is to sell shovels to the late arrivals.  

In reply to by East Indian

Maestro Maestro Oh regional Indian Wed, 08/09/2017 - 11:53 Permalink

Consider: 1. You didn't make the computer you're using to mine, buy and sell bitcoin so you don't have control over it BUT somebody else did make that computer so, by definition, somebody else has control over it.  (Physical ownership or usage does not entail control.)2. You didn't write the software you're using to mine, buy and sell bitcoin so you don't have control over it BUT somebody else did write that software so, by definition, somebody else has control over it. 3. You don't generate the internet so you don't control it but somebody else did and by definition, they control it.  (NSA also comes to mind.)4. You don't even know whether Satoshi Nakamoto is a real person or a group of people, yet you believe that he/they created an ELECTRONIC RECORD BASE aka as blockchain only out of the goodness of their heart without any personal agendas, which supposedly allows "digital information to be distributed but not copied".  How can anything that's distributed remain singular?  By definition, distribution means 'many copies' as opposed to 'only one original'.  Each computer screen is showing a physically nonidentical copy of a piece of electronic information that's assumed to be the same one as the original piece of information continuously modified and generated in a multitude of unknown cyber space-time locations -- the best known example of this process being known as the bitcoin.  How can you value something only for its attribute of being singular when you also know that by definition it is MANY, or of a multitudinous nature?  And if it's many, how do you know how many there is out there?  Especially when you don't control neither the computer nor the software nor the program (aka blockchain) used to create it? 

In reply to by Oh regional Indian

I_rikey_lice giovanni_f Wed, 08/09/2017 - 04:04 Permalink

RMC is SEEKING to raise $100 million yet the title says  "Launches $100 Million Bitcoin Mining Operation" Nice Fake News Story.100% Other Peoples Money.You get a new shiny token and if they raise the $100 million and just decide to keep your bitcoins?What are you going to do then?No guarantee that a dime will go towards any mining hardware or that a single bitcoin will be mined.Sounds like a news release from the Venture Exchange.I have seen Junior miners raise millions of dollars to explore a property, drill a couple of holes, write-off the property as non-economic and use the money to pay their salaries for several years until it runs out.If Russians put up $100 million of their own money then it would be different.Sounds like a scam to me but I am not part of the cult.

In reply to by giovanni_f

tmosley I_rikey_lice Wed, 08/09/2017 - 04:37 Permalink

>You get a new shiny token and if they raise the $100 million and just decide to keep your bitcoins?Hahaha, good job focusing on the part that doesn't matter.Investors get a completely shit ~20% return on their money while Russia gets the other ~80% for their reserves at best. At worst, the Russians run off with their money and just buy bitcoin (generally a better move, IMO).If Russian electricity is really that cheap it might happen though.

In reply to by I_rikey_lice

I_rikey_lice tmosley Wed, 08/09/2017 - 04:49 Permalink

Russia will create their own crypto. They will never use bitcoin or Eth or whatever is out there right now. When Russia does launch their own, bitcoin and the others will be made illegal.Anyways, this $100 Million raise is nothing but a scam that I have seen over and over again on the Venture Exchange.  

In reply to by tmosley

fattail tmosley Wed, 08/09/2017 - 07:12 Permalink

$100 million seems like a pittance compared to the balance sheet of the multi national corporations and CBs that can just print fiat.  Why would they need my little investment?  Kind of like the 1/64 investment in oil wells that go in at the tail end of the boom.  All the good plays are not open for investment because the guys with all of the technology and money to find them, don't need outside investment.  Only dry holes are available to the small frys.  

In reply to by tmosley

keep the basta… ACP Wed, 08/09/2017 - 04:06 Permalink

no, Putin is amazingly intelligent and most certainly attentive.  His country has recovered from hell and is flourishing despite  sanctions and  cost, and has a GDP 12% lower than Aus with buggerall debt unlike Aus with top world mortgage debt.  Btcoin is not debt debt based. Not central bankster controlled..crytpo will be great in use  on the New Silk Road.

In reply to by ACP

samjam7 Wed, 08/09/2017 - 02:55 Permalink

"The Central Bank of Russia has already deployed an Ethereum-based blockchain as a pilot project to process online payments and verify customer data with lenders including Sberbank PJSC."  Central Banks trying to control Blockchain, why should Russia be any different than the west?

Herp and Derp RenoCarlino Wed, 08/09/2017 - 03:10 Permalink

They and the Chinese or anywhere else with cheap electricity it is just profitable.  In the US and most countries, the electricity and the hardware is set at a market price somewhere around 6-12 months to recoup costs.  Even with cheap electricity, the prices for hardware are set to about 5-6 months of use of the hardware.In general, by that time the complexity has increased and hardware is possibly obsolete.  So, you need to buy better or more to have similar mining results.  You hardly ever get ahead outside of what little coins you mine goes up in value.  So yes, just buy the damn coin.

In reply to by RenoCarlino

Manipuflation Wed, 08/09/2017 - 03:03 Permalink

Sounds like some kind of bullshit I would write.  Right after I wrote an article entitled, "Russian Women Will Tolerate Any Man's Bullshit With a Smile and a Thank You".No?  Well?      

Manipuflation Manipuflation Wed, 08/09/2017 - 04:50 Permalink

Are you junkers that fucking dumb?  It was a joke.  I guess you don't get the joke.  Like Russia is only now going to go mining for bitcoin.  And like a Russian woman will take shit from any man. That is what happens when you fall in love with Russia but have only read about it and have never been there.You are not uberstanding the sarcasm.  Juxtopistion of terms and just being a smartass.  Get on a plane and get out of Mom's basement. 

In reply to by Manipuflation