Russia's Siberia uses cold weather and hydroelectricity to become a major Bitcoin mining hub

When it comes to Bitcoin mining, China is still the world's largest producer, but the Russian wilderness has a geographical advantage: the frozen land saves on cooling costs for mining centers, abundant hydropower provides cheap electricity, and the almost useless land in Siberia is just right for mining. As the value of Bitcoin soars to over $50,000, Russian mining companies are rushing to mine Bitcoin.

Bratsk, with a population of less than 260,000, is located on the Angara River, a tributary of the Yenisei River, flowing out of Lake Baikal. It is one of the most remote cities in the world and one of the most polluted cities in the world. It is adjacent to the Bratsk Reservoir, one of the largest reservoirs in the world, which is seriously polluted by mercury. However, it is the main source of drinking water and fish food in Bratsk. The average temperature in winter is -15.7~23.4 degrees Celsius, and the average temperature in summer is only 13.3~23.8 degrees Celsius. In such a cold and uninhabitable place, new businesses are quietly emerging.

BitRiver's 100 megawatt main data center is located in Bratsk, and there are several smaller bases that use cheap hydroelectric power from the Bratsk reservoir, which has a capacity of 4.5 gigawatts, to mine for customers in the United States, Europe, Japan and around the world who want to buy Bitcoin. BitRiver claims to account for about 2% of the world's mining output.

Bitcoin broke through $50,000, and Tesla announced that it had purchased $1.5 billion worth of Bitcoin, which led to a resurgence of Bitcoin mining fever. The first wave of Bitcoin "miners" had a large number of "abandoned mines" when Bitcoin gradually reduced its mining income and the price of Bitcoin was not as high as it is today. That is, mining failed to make ends meet, leaving behind a large number of computing servers. But now that Bitcoin is extremely valuable, the mining business has also risen with it.

BitRiver is ambitiously sprinting towards its valet mining service, saying that customers currently demand more than 700 megawatts of mining computing power, and is approaching 1 gigawatt. For this reason, BitRiver will add 300 megawatts of capacity in 2021. Currently, BitRiver has built a 100 megawatt computing center in the neighboring Republic of Buryatia. In December 2020, 14 carloads of server-related equipment were shipped to Bratsk. The expansion of BitRiver has also driven the economic development of Bratsk.

Russia legalized cryptocurrencies in 2020, but banned them from payment. This did not have much impact on BitRiver, as BitRiver mainly charged foreign customers in US dollars or rubles. Its business model of mining on behalf of customers also prevented BitRiver from being directly impacted by the ups and downs of Bitcoin. The fees charged for mining on behalf of customers were fixed, and the risk of Bitcoin price fluctuations was borne by customers. Although BitRiver could not directly profit from the surge in Bitcoin, the mining craze triggered by the surge in Bitcoin also increased its revenue by 2.5 times in 2020.

By using hydroelectric power, Bit River claims that it has not increased its carbon footprint. Currently, 90% of Bit River's electricity is renewable energy, and in the future, it will choose locations with renewable energy sources nearby. In fact, in places like Bratsk, using reservoir hydroelectric power from Russian infrastructure, the main consideration is low cost. It just happens that hydroelectric power is also a renewable energy source, which is just a side benefit.

At present, China is still the largest country in Bitcoin mining, but according to statistics from the Russian Association of Cryptoeconomicss, Artificial Intelligence and Blockchain, Russia's national Bitcoin mining output accounts for about 7% of the world's total, not including illegal miners. Kazakhstan also accounts for about 7%. China's Bitcoin mining industry has advantages in terms of capital, supply chain and some gray area interests. For example, many illegal operations use electricity theft or bribery, but Russia has a geographical advantage, a cold climate, and 9% of the world's hydroelectric power resources - most of which are located in Siberia - the vast Siberia will inevitably see more and more Bitcoin mines in the future.