Recently, bitcoin has been repeatedly criticised for its poor environmental record, also by the Chinese government. The country, where the majority of cryptocurrencies are mined, recently announced its intention to take action against mining farms. Russia, however, could now benefit from this.
The topic of sustainability and eco-friendliness is currently on everyone’s lips – especially when it comes to areas where improvements could definitely be made. Just a few months ago, for example, criticism was voiced about the computationally intensive mining process of Bitcoin and other proof-of-work (PoW) cryptocurrencies. Shortly after, Elon Musk, CEO of the US electric car manufacturer Tesla declared that it had not only invested billions in the digital asset but that it would soon also allow its customers to pay for their own electric cars with it. Opposition arose from the Chinese government. The country wants to take action against the climate-damaging mining of the cryptocurrency – and at the same time secure the stability of the renminbi.
Tesla CEO Elon Musk, who had previously praised Bitcoin to the skies, has since backed down and removed the option to pay with Bitcoin from the online shop.
Russia wants to profit from China's exodus
Consequently, Chinese mining companies are currently having a hard time in the Middle Kingdom. However, a project from Russia that is supposed to promote the crypto industry could now provide a remedy. The Russian Association of the Crypto Industry and Blockchain, which also goes by the acronym RACIB, has set itself the goal of bringing the world’s mining resources to the largest country in terms of area as a project announcement shows.
The organisation’s largest foreign cooperation partner is currently an association of various mining farms from China. Together, the companies handle 25 per cent of the world’s hash rate, i.e. the total computing power used in mining the most important cryptocurrencies – first and foremost Bitcoin. If they move their computing capacity to Russia, the country could gain a strong market share for itself. According to the organisation, China currently accounts for 60 per cent of the total mining process, but due to regulations and lack of energy capacity, there is likely to be a migration to other countries such as the USA or Canada, which offer low electricity costs and crypto-friendly regulations. The initiative aims to limit migration to North America and bring mining farms, and therefore also more centralised control, to Russia.
Russia has already shown itself to be crypto-friendly in the past. The state is also suitable for mining cybercurrencies. According to the organisation, the country not only scores points for its centralised energy system, whereby 90 per cent of the country’s total electricity is produced in large power plants, but Russia also has a large surplus of electricity to offer. The weather conditions could also bring advantages for the mining process of cryptocurrencies, RACIB continues. Accordingly, the cold climate in the country could support the cooling of data centres so that no enormous energy is required. Since there is a high level of professionalism among skilled workers in Russia, but at the same time, many regions are sparsely populated, large energy and infrastructure facilities could be built, according to the association. “All this provides additional advantages, benefits and attractiveness for large foreign investments in the Russian energy complex, provides the best conditions for the formation of specialised clusters on the territory of the country, supporting global cryptocurrency networks and infrastructure of the global digital economy,” the project is stated in the announcement.
Russia steps up with green energy sources
To achieve this ambitious goal, RACIB is not only working with state-owned companies but also with Russian authorities, so that several working groups have been formed. One of these project groups, for example, has focused particularly on the sustainability aspect and wants to enable mining companies to use renewable energy sources.
Hydroelectric and nuclear energy still account for 40 per cent of all electricity sources in Russia, but the intention is now to venture more into green energy sources such as wind power. This year, 1,158 megawatts of new-generation wind turbines have already been built in some regions. The Rostov region is particularly promising in this area, as Russia’s largest wind farm with a capacity of 300 megawatts is currently located there. The association wants to include these structures when it comes to finding suitable locations for the construction of data centres. The capacity of all planned mining farms should then be more than two gigawatts.