Bitcoin is earned – or “mined” – by using your computer to process the unbreakable “blockchains” or digital transaction records that underlie the currency
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Four thousand kilometers from Moscow, near the coast of the Angara River, a Russian company that operates a huge data center with cheap local hydropower is benefiting from the soaring prices of Bitcoin and planning to double its output this year.
BitRiver hosts devices in its flagship 100 megawatt data center in the city of Bratsk, as well as other smaller locations for foreign cryptocurrency miners from the US, Europe and Japan looking to harness the region’s cheap energy.
The company could already be responsible for up to 2% of the world’s bitcoin mining, Chief Executive Igor Runets estimated, but exact numbers in that sector have been hard to come by.
Bitcoin’s price has risen nearly 300% since early November and topped $ 50,000 for the first time last month when Tesla Inc bought $ 1.5 billion worth of bitcoin and other large corporations and investment houses bought small traders followed.
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Bitcoin is earned – or “mined” – by using your computer to process the unbreakable “blockchains” or digital transaction records that underlie the currency.
This requires enormous computing capacity and a lot of electricity and is mostly done with huge machines in hangar-sized warehouses of aircraft in the cooler climates of Iceland, Canada, northern China and Russia, where the distribution of the generated heat costs less.
The rewards for those who can verify transactions in the process that produces bitcoins have never been higher.
“Current demand from our customers is exceeding 700 megawatts and approaching one gigawatt,” said Runets. “We will of course continue to build data processing centers. We are planning an output of 300 megawatts by 2021.”
Another 100 megawatt center is already under construction in the neighboring Buryatiya region, Runets said.
Also read | Only 270 crypto addresses laundered $ 1.3 billion of dirty money in the past year, research shows
Big deals with overseas firms, such as one last December that saw 14 trucks with equipment arriving in Bratsk, can boost the local economy and are a sign that BitRiver has become a global player, he said in a corporate video.
Russia granted cryptocurrencies legal status last year, but banned them from being used as a means of payment.
“The current legislation in Russia doesn’t hinder us anyway,” said Runets. “It enables us to host the computer equipment of foreign customers on Russian territory with bills in dollars or rubles.”
This agreement reduces the financial impact of Bitcoin price fluctuations on BitRiver.
“If Bitcoin goes down or up, my profits and sales will be almost unchanged,” said Runets. “This financial stability in a volatile market is very valuable.”
More liberal legislation would lead to bigger investments by Russian gamers, Runets added, which could help BitRiver improve its 2.5x year-over-year revenue growth in 2020. He declined to disclose further financial details.
Also read | India will be a big data economy; will have data refinery: Ravi Shankar Prasad
One of the main problems with Bitcoin miners is their carbon footprint. According to Runets, BitRiver uses more than 90% green electricity as it builds data centers in regions with excess electricity and renewable energy sources nearby.
According to Alexander Brazhnikov, executive director of the Russian Association for Cryptoeconomics, Artificial Intelligence and Blockchain, Russia accounts for about 7% of the world’s bitcoin mining.
Kazakhstan accounts for a similar number while China leads the market.
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