Russian Oligarch Turns Soviet Plant Into a Major Bitcoin Mining Hub
The largest data center in the former Soviet Union, BitRiver, opened about a year ago in the Siberian city of Bratsk and most of its clients use the facility to mine Bitcoin (BTC), Bloomberg reported on Nov. 24.
The data center allows cryptocurrency miners to take advantage of cheap energy in what once used to be the world’s largest aluminum smelter. The plant was built by the USSR in the 1960s with the still-active hydropower plant to power its operations.
Cold climate, cheap energy
The data center’s location also benefits from a cold climate, allowing mining hardware to work at higher efficiency rates while cutting cooling costs.
Billionaire and president of the world's second-largest aluminum company Rusal, Oleg Deripaska, is Bitriver’s biggest shareholder. He reportedly had the idea of building the data center about five years ago and directed his company Rusal alongside aluminum and power producer En+ to repurpose the facilities.
According to Bloomberg, Russian law does not recognize cryptocurrency mining. Because of this legal gray area, Bitriver does not directly engage in mining, but only provides equipment and technical services to its clients — including from Japan, China and the United States — operating like any other data center.
En+, in which Deripaska and his family own a 45% stake, supplies up to 100 megawatts of power to the facility, enough energy to sustain 100,000 homes. The plant is the largest hydropower plant in Russia and the data center allows it to constantly sell excess energy and diversify its client base.
BitRiver is paying for the power 2.4 rubles per kilowatt-hour, equivalent to about $0.038 without value-added tax and sells it at 3.5 rubles ($0.055) per kWh to miners. For comparison, the average price of electricity in the United States is about $0.12 per kWh.
Bitcoin miners unfazed by BTC price drop
Bitcoin and the overall cryptocurrency market saw a significant drop in price earlier this week, as BTC briefly fell under $7,000. Still, miners are seemingly keen to continue boosting their capacity.
“There is NO miner capitulation,” commented Bitcoin entrepreneur Alistair Milne on Sunday following a rise in network hash rate and expected difficulty hike. He continued:
“They are acutely aware of the upcoming halving and are apparently unphased by the recent dip.”
As Cointelegraph reported earlier this week, German Bitcoin mining firm Northern Bitcoin has entered a merger agreement with United States-based competitor Whinstone to jointly build what will supposedly be the world’s largest mining farm.