Investors Are Buying Power Stations In Russia To Mine Cryptocurrency

Two electric power stations in Russia were recently sold to a cryptocurrency miner looking to expand his operations – the latest sign that the country’s government-supported push to become a cryptocurrency mining hub has been successful.

The two stations are situated in the Perm Region on the western slopes of the Middle Ural Mountains, and in the neighboring Republic of Udmurtia. The facilities will be used as data centers as well as housing for cryptocurrency mining equipment and a center for cryptocurrency mining. The price paid for the two stations? Roughly 160 million rubles (about $3 million), according to RT.

After initially approaching cryptocurrencies with skepticism, the Russian government last summer signaled that it would instead try to regulate and embrace the markets.

Russia

That trend has culminated with the Russian Ministry of Finance drafting a bill to legalize the trading of cryptocurrencies on approved exchanges, according to Deputy Finance Minister Alexei Moiseev, who has indicated that the government is seeking to provide greater oversight. President Vladimir Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, and initial coin offerings, as well as defining everything that relates to digital money, by July.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180115_crypto.png

image courtesy of CoinTelegraph

The bill will open the door to more open cryptocurrency trading and investment within Russia, as some countries like China have sought to stamp out both mining and trading.

In August, a company known as Russian Miner Coin, or RMC, announced that it would try to raise $100 million in an initial coin offering, promising to allocate 18% of the company’s mining revenue to holders of their tokens. The company was founded by a close aide to Putin.

The law currently being written by the Duma will be the country’s first targeting cryptocurrencies. Back in December, Moiseev suggested that mining bitcoin and other cryptocurrencies could be made illegal, though he quickly back-tracked from those comments.

The new owner of the power stations, businessman Aleksey Kolesnik, has indirectly confirmed the acquisition – though he added that he will wait to begin mining cryptocurrencies from the facilities until after Russia adopts the relevant legislation.

Furthermore, the Russian government and its state-owned energy companies have reportedly considered launching a digital currency that could be used in partnership with Venezuela, Iran and Russia to circumvent US sanctions in accepting payment for their oil exports, similar to Venezuela’s Petro, an oil-backed digital currency that is being developed by Latin America's favorite Socialist Paradise.

 

Comments

mc225 Tue, 01/16/2018 - 02:50 Permalink

is it a waste of electricity, to design digital currency this way? to this layman, making money out of electricity; it doesn't seem too far removed from old-fashioned paper. but, this 'digital currency' seems like it wastes electricity... paper might have been more energy efficient...

Moe-Monay ManTheMan Tue, 01/16/2018 - 07:12 Permalink

If you consider replacing and possibly taking away the Money Powers of the Western Private Central Banking to be a waste of electricity I do not know what you could possibly consider not to be a waste.

This is HUGE.  I had already been working this sort of angle. The only explanation as to why American power plants such as coal fired ones that generate extremely cheap electricity have not been mining crypto is that the simian banking hierarchy put order out from on high that "Thou shalt not mine cryptocurrency" at your power plants.

Too many here on Zh have the "muh gold" jealousy about BTC.  Gold is not going to replace private central banking. Anyone here who has half a brain realizes NOTHING CHANGES until the private cartel with the power of the creation of money out of thin air is brought down. Appears all you care about is a Jim Willie like religious adherence to your idea that gold should go up in price.

The cabal controls: money creation out of thin air / all the big media / governments/ intelligence services.  Additionally CIA runs the drug trades for them so they have a broadly based assassination staff that they can use to enforce against people they can't figure out how to control otherwise.  Thus I posit that NOTHING changes until the money powers are wrestled from them.   This cabal even beats down historians who do not toe the company line.

In reply to by ManTheMan

mtl4 Moe-Monay Tue, 01/16/2018 - 08:15 Permalink

The system is massively inefficient (shown by the need to buy power stations to secure cheap supply) but it also shows that it will likely succeed in the future, but not before you get a big tree shaking in the crypto market.

In reply to by Moe-Monay

HRClinton mc225 Tue, 01/16/2018 - 06:07 Permalink

CCs are evolving and its ecosystem is growing. Just as the mighty Dinosaurs were eventually replaced by smaller, faster and more efficient forms, so too CCs are already evolving and propagating.

These power plants make perfect sense, and are poised to abide by the eternal and universal Laws of Physics. Everything is based on the Natural Trinity:

   Matter, Energy and Information

The most successful CCs will have their Architecture based on the most efficient embodiments of these 3.

*

It was totally predictable, that CC mining would occur near cheap sources of electrical power, and use specialized computers: ASIC platforms, free of Intel chips with bugs/features, ie. "NSA inside".

Just as we see here that CC miners are setting up Russia, so too Chinese miners are hedging with strategic locations outside of China -- with a group of them setting up shop near power stations in the Canadian province of Quebec.

Some days ago, ZH ran an article on electricity prices in N.Am., and I pointed out Montreal, Calgary and Vancouver/Hongcouver as preferred locations. In the case of Montreal, I wrote that (aside from cheap ekectricity from Hydro Quebec), Montreal is a major hub for Videocard and ASIC designers. Few know the reason for this: it is because the Canadian flight simulator giant CAE is located there, and they have pioneered ASIC design for top end CGI for their multi-million dollar full-motion, commercial flight simulators, used by all the major airlines. Former CAE engineers have created spin-off companies, that targeted the Gaming industry.

And now you know.

p.s. You should also know that CC-Mining is only one of 3 forms of CC creation, utilising the POW (Proof Of Work) principle that is in BTC, LTC, ETH, etc. One alternate form is Proof-of-Stake (POS).

In reply to by mc225

Moe-Monay HRClinton Tue, 01/16/2018 - 07:21 Permalink

But the final cryptocurrency solution will be entropically considerate  constrained by the mandate an evasion of the money power's control.  Otherwise CC make no sense whatsoever because the FedRes could just run a database at great savings of electricity but NO relief from their oppression for the people.

The single and only reason why CC is so wildly interesting to people whether they realize it or not is they on some level either conscious or unconsciously sense the potential to take the money powers away from central authority.   For early adopters this is quite conscious.  For the later adapters they are currently camp followers.  I expect a large fraction of the to wake up more and more with time.

Maximum entropy rule will apply - The distribution with the maximum entropy given the constraings is the distribution nature chooses for the random variable.  This is the one of the most important concepts of information theory.

In reply to by HRClinton

HRClinton mc225 Tue, 01/16/2018 - 07:18 Permalink

The "waste of electricity" depends on the kind of CC Creation and Transaction involved.

You are obviously referring to the prevailing POW (Proof Of Work) type of creation and transaction. The only type that you and most poorly informed and CC hating oldtimers are aware of.

There are new, far more efficient CC players emerging - as might be expected. For example...

NEO has become China’s first open-source public blockchain project and is backed by the Chinese government. Ethereum is backed by the EEA (Enterprise Ethereum Alliance), which is why it is so popular and has the massive potential on the global stage that it does. NEO utilizes a delegated proof-of-stake consensus mechanism named Byzantine Fault Tolerant (dBFT), which is far more efficient than the current Proof-Of-Work (POW) mechanism used by Ethereum or Bitcoin. Eventually, Ethereum plans to move to an efficient Proof-of-Stake (POS) mechanism as the project expands. BTC is slated for an upgrade to Lightning, as Tectonic forces in the CC market force consensus in that direction. 

Bottom line: The CC ecosystem will keep evolving, as it adapts to and overcomes market and political challenges. Unlike some people. The Chinese are smart enough to front-run these issues and opportunities. Again, "unlike some people here".

Hang on you Quick Buck Artists.  It's gonna be a bumpy ride, that's not for investment flakes or simpletons. But fear not, my fair-weather libertian friends. Big Bankers will get Big Brother to look after all ye flakes and simpletons, when the dirty work of preparing (tilling and fertilizing) the financial soil is done. They will then come along, to smooth the soil with regulations and plant their CC seed for ye to tend to on the Brave New Debt Plantation.

Did you really think that leaving their Debt Plantation and Going Galt with CCs was gonna be that easy?  Look, even a couple of brave Libertarian Texans, like HH and LoP have remained on the Tax Plantation, when they converted their CC into fiat gains in Nov and Dec. It's not every day that a ballsy HODLer (like me) gives (((them))) the financial Finger, by going extra steps & miles to Go Galt: Alt CCs, AU and Gems -- all kept in "safe spaces".

In reply to by mc225

Moe-Monay HRClinton Tue, 01/16/2018 - 07:40 Permalink

Zh gold golum's dentures regularly fall out and plop into the toilet in regards cryptocurrencies.  

My central supposition is that this CC boom has already lead to a distributed peer to peer Napster style internet solution. Add on top of this the natural impulse to be free of the money powers cabal and you have a situation where the CC ecospace will likely continue evolving and undermining central authority.  The day will come when NSA is going to have a tough time figuring out what one box is saying to another.  Rightly so.

In reply to by HRClinton

HRClinton Moe-Monay Tue, 01/16/2018 - 08:23 Permalink

Amen to that. P2P CC exchanges are still somewhat intimidating for novices, but will remain popular as the Preferred path for the more experienced and privacy minded.

Look, I pay taxes. But be damned if I'll pay them on my Assets. What I do with my assets and what risks I take with them outside the fiat system, is purely my business. 

TPTB will try to resist that, for Global-Lusts likely will not allow large groups to Go Galt, if they are going to prosper. They're perfectly happy, if you live like a bum or are very poor. They will likely even tolerate a discrete and rich HODLer, who has the Tradecraft to stay out of their Net. But they won't tolerate whole communities that avoid their Plantation currency and its associated reporting. NK and Iran are merely examples of this on a national scale, IMO.

In reply to by Moe-Monay

DrCassandra mc225 Tue, 01/16/2018 - 11:37 Permalink

Each Bitcoin mined using coal-fired power is associated with 1.5 tons of CO2 emissions. Bitcoins are “mined” by performing complex calculations on a computer. Each computer needs electricity to run, and it turns out to be a lot of electricity. John Quiggin has done the numbers and the results are shocking. The complex calculation itself has no value except to show that it has been done. This competes with finger spinning as one of the most wasteful activities on the planet. A fiscal policy based on Bitcoin is as sensible as the one based on leaves in Douglas Adams Hitchhiker’s Guide to the Galaxy. More...

https://www.linkedin.com/pulse/bitcoins-dirty-secrets-jonathan-frost/

In reply to by mc225

Moe-Monay Pool Shark Tue, 01/16/2018 - 07:47 Permalink

You don't know your bitcoin price history do you? 

All you are able to do is cheer lead it going down because you either are a central banking shill ( I have no doubt Jamie Dimon has an army of btc shit talking trolls )  or one of these retarded gold bugs that just can't abide gold having a competitor.  Check your monetary history.  There is a reason for William Jennings Bryant's shit talking gold in one of the most famous speeches ever given.  It's because the money powers monopolize it when it is the only monetary standard basis.

We need money diversity if we're ever going to evade wholesale control by the money powers.  That means gold and a whole bunch of other tools. But you have your stack and all you care about is that it goes up in price. Flowering of humanity be damned.  Humanity is no where even near 10% of potential as it is.  It has a long way up to go if we rid ourselves of our money powers overlourds.

In reply to by Pool Shark

spdrdr Pool Shark Tue, 01/16/2018 - 03:14 Permalink

BUT we are told today by ZH that 80% of the 21 million BTC have now been mined.

I always thought that the "mining" process authenticated the blockchain underlying BitCoin.

Tell me this - if there are no more BitCoins left to "mine", doesn't this immediately mean the system will crash, because no-one is going to bother with verification for no return?

In reply to by Pool Shark

floosy spdrdr Tue, 01/16/2018 - 04:31 Permalink

"mined" is entirely the wrong word.  The correct word should be "distributed".

There was set number of BTC made available at the outset of 21 million, but these have not been distributed. Every time a block on the chain is successfully verified (by a "miner") the verifier receives a reward of x number of bitcoins plus a percentage of the transaction fees. The number rewarded per block halves approximately every 4 years, hence eventually, it will be zero.  At that point the only reward for verification of a block will be the transaction fees.

Coins are DISTRIBUTED as a REWARD for block verification.

I wish to fucking god everyone would just drop the stupid term "miner" and learn how crypto-currency really works.

In reply to by spdrdr

Manipuflation Tue, 01/16/2018 - 03:14 Permalink

Russian mother-in-law?  She runs their books in the south at least.  She makes bank.  Those Russian women can make some money.  OK.  That means I can go fishing. 

CanadaGoose Tue, 01/16/2018 - 03:18 Permalink

Apparently there are about 3 - 4 million bitcoins that are lost.  So that leaves about 1 million bitcoins left to mine.  Old engineering rule: "The last 20% takes 80% of the effort/investment".

RedDwarf Tue, 01/16/2018 - 03:21 Permalink

Meanwhile Korea and China is foolishly trying to make them illegal.  Looks like the crypto revolution will primarily take hold in Russia, Eastern Europe, and the Scandinavian countries primarily.

That is where the capital will fly to, that is where the world influence and power will grow.  The foundation for being a power or superpower always begins with the economic.

ThePhantom Tue, 01/16/2018 - 03:28 Permalink

12,000 buy buy buy.... south Korea outlaws and watch the price soar... like anything made illegal, every ones got to have it. any story will do.. bitcoin 25,000 whenever

Dragon HAwk Tue, 01/16/2018 - 04:31 Permalink

I can see electricity being money,  it's energy, but not the Blowing/Using of energy being money. that would be like  dump a barrel of oil into a fire and i will give you 5 bucks. smash your car battery and i will give you 3. Crazy Pill Times

 

ThrowAwayYourTV Panic Mode Tue, 01/16/2018 - 06:10 Permalink

The Constitution contains only two sections dealing with monetary issues. Section 8 permits Congress to coin money and to regulate its value. Section 10 denies states the right to coin or to print their own money. The framers clearly intended a national monetary system based on coin and for the power to regulate that system to rest only with the federal government.

In reply to by Panic Mode