Bitcoin miners set up in Siberia aiding network decentralization
Cheap hydroelectricity and frigid year-round temperatures have made the Siberian city of Bratsk home to several Bitcoin mining farms. By repurposing abandoned Soviet munitions factories the region could soon become a new hub for Bitcoin mining, moving hash power away from the now-dominant Chinese mining sector.
Bitcoin mining farms migrate to the Far East
Bitcoin’s approaching halving will drastically reduce mining rewards. Now begins a race to keep mining operations profitable by driving down major costs: electricity, cooling, and equipment. This has resulted in a worldwide search to find locations with readily available cheap electricity, usually around major hydroelectric dams.
Overseas, Iceland’s cooler climate made it a decent choice for large mining farms. But, by and large the most cost effective mining locations are still around government dams in China, where electricity is abundant and absurdly cheap.
Research released in October 2018 showed that Chinese mining pools accounted for 74 percent of Bitcoin’s hash power. Sources embedded in the industry confirmed these fears, saying that the majority of Bitcoin mining happens in China as a result of Bitmain and Canaan’s dominant position over ASIC production.
Yet, a mining ban in the country will compel these players to move to new destinations, like Siberia. More precisely, the Irkutsk region in eastern Russia. Once the heart of the Soviet weapons manufacturing, the collapse of the USSR resulted in many of these factories shutting down, leaving the region filled with abandoned plants.
The exodus of miners from China is already visible, with one of the largest miners seen diversifying their operations to the United States.
Several large Bitcoin mining farms recognized the potential of the Irkutsk region, specifically the city of Bratsk, as reported by ZeroHedge. The region’s year-long low temperatures paired with one of the lowest costs of electricity in the world made it a perfect spot to set up mining farms. Dmitry Ozersky, CEO of Eletro.Farm, a Kazakhstan-based mining company, said that the close of former Soviet plants also led to a huge surplus of electric power in the region.
Mining farms in Irkutsk boast incredible capacities
With most of the electric power surplus directed at Bitcoin mining, BTC mining farms across Russia now have a joint capacity of 600 megawatts, Ozersky said. They alone account for almost 10 percent of the total power supporting the Bitcoin network, which is around 7 gigawatts globally. Though, this still pales in comparison to estimates of hash power concentration in China.
That said, with more international awareness of the region the number of mining farms is expected to grow.
BitRiver, a mining data center established in the city of Bratsk, has a total capacity of 100 megawatts per hour (MW/h) and hosts 18,000 ASIC miners at its facility, a repurposed metal factory. Ivan Kaap, a security officer at BitRiver, said the farm gets one or two new clients every week.
Nearby, a competitor to BitRiver has also set up camp at the outskirts of Bratsk. The company, Minery, is among the few that haven’t set up in an industrial facility the farm has two venues around the Irkutsk region and has a total capacity of 30 megawatts.
Fedor Egorov, the CEO of Cryptoreactor, another mining facility in Bratsk, said his venue has a capacity of 40 megawatts, with its clients’ ASICs consuming 15 megawatts. Due to increased demand, the company will grow the capacity to 63 megawatts soon, Egorov said.
Ilya Bruman, the CEO of Minery, told journalists that a client from Korea, which owns 550 ASICs on the farm, managed to produce 0.5 BTC over the course of one night.
The booming mining industry in Russia could prove advantageous for Bitcoin. China has been a rallying cry against proof-of-work and Bitcoin among critics. These critics have claimed that should China nationalize its mining farms it could control over 50 percent of the hash power on the Bitcoin network. Now, Siberia’s rise to prominence could prove a boon for the network’s decentralization.