Russia looks at coal mines to revive crypto mining industry
Authorities in a Russian region are planning to set up cryptocurrency mining farms near coal mining sites as part of efforts to slow down the decline in the region’s main industry.
Local officials in the Siberian Kemerovo Oblast believe this will be economically feasible as it would take only a few years to return initial investments in crypto mining hardware.
Coin mining could save coal mining in Kuzbas
A crypto mining farm running next to a coal mine can pay for itself in about four or five years, according to official assessments made in Russia’s Kemerovo region.
Economists have calculated that building a brand-new coin mining facility, including a dedicated thermal plant, would require approximately 5 billion rubles ($62 million).
At the same time, they expect around 1 billion rubles in annual profits (over $12 million) from its operation, the head of the regional government of Kuzbas, Andrey Panov, told the TASS news agency.
Kuzbas, or the Kuznetsk Basin, is among the largest coal mining areas in the Russian Federation. It lies in the Kemerovo Oblast in southwestern Siberia.
Panov’s statements come after Kemerovo Governor Ilya Seredyuk announced he intends to instruct relevant bodies to consider the economic feasibility of building power plants, greenhouses and crypto farms on the premises of coal mining enterprises.
This could reduce the rate of decline in the region’s coal production, Seredyuk emphasized. Both officials were also quoted by the Gazeta.ru news portal on Monday.
Preliminary estimates suggest that a 4.6-billion-ruble investment can provide electricity costs of 3 rubles per 1 kWh (less than $0.03), Panov detailed. He further elaborated:
The specialists who made the calculations are convinced that annual profits can reach 1 billion rubles, ensuring the full return of initial investments in mining equipment in just four years.
Russia trying to find a place for crypto mining
Minting of digital currencies was legalized in Russia last year. Since then, both companies and individual entrepreneurs are free to mine, provided they register for taxation purposes.
The legalization of the industry sparked a mining boom, which was later blamed for growing energy deficits and breakdowns of distribution networks in parts of the country that attracted miners with low electricity rates.
To deal with the situation, the authorities in a number of regions imposed seasonal restrictions during months of peak electricity consumption. In about a dozen territories, these were eventually substituted with permanent bans.
Despite mining competing for energy with other consumers and important sectors, including data centers devoted to artificial intelligence (AI) development, Russia hasn’t given up on Bitcoin mining yet.
The vast country has a number of competitive advantages in this field, such as cool climates, for example, besides abundant energy resources, including natural oil, gas and nuclear power.
In May, Russia’s Deputy Minister of Energy Evgeny Grabchak suggested crypto miners should relocate to regions with excess generation capacities, where they’ll enjoy cheaper electricity.
Such conditions can be found at abandoned oil wells in the north, the government official elaborated. Mining firms can also utilize their transmission infrastructure, which is currently unused.
Later that month, the head of the Ministry for the Development of the Far East and the Arctic, Aleksey Chekunkov, proposed to offer surplus quantities of natural gas, amid reduced European deliveries, to Russian cryptocurrency miners.
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