Mining virtual money in the Arctic
© RIA Novosti. Vladimir Astapkovich

Mining virtual money in the Arctic

On February 15, Deputy Energy Minister Vyacheslav Kravchenko recommended that miners start building cryptocurrency farms on the Kola Peninsula.

It could be an interesting concept given that Murmansk is an energy-surplus region. It has the Kola nuclear power plant with four 440 MW power units and 17 hydroelectric power plants of varying capacity. The hydroelectric power plants are mainly cascade systems including the Tuloma power plant cascade system with a total capacity of some 400 MW, the Serebryanskaya power plant (total capacity over 350 MW), the Niva power plant (some 250 MW), and three Kovda cascade power plants (some 300 MW). The unique Kislaya Guba Tidal Power Station on the Barents Sea coast has a capacity of 1.7 MW. Taken together they have huge capacity that is not being fully used.

There is logic in this initiative by the Russian energy authorities. If cryptocurrency miners decide to use the region's underutilized power plants, it would produce additional revenue and increase the power plants' performance to their rated output capacity.

Cryptocurrency miners have been offered lower prices than in other regions, and cooling cryptocurrency farms would be easier in the winter on the Kola Peninsula than in other Russian regions. The farms could be located near power plants. There are several sites around the region that could be interesting for investors in cryptocurrency mining.

The only problem is the absence of laws on cryptocurrency operations, or more specifically, mining, in Russia. For example, the Chinese recently banned mining and cryptocurrency trading even on foreign venues, which dealt a crushing blow to the cryptocurrency market some time ago. On the other hand, Venezuela has launched its own cryptocurrency, El Petro, or petromoneda, which is allegedly backed by the country's oil and mineral reserves and is designed to pull the country's ailing economy out of a crisis.

It is so far unclear which path Russia will choose. Conflicting opinions have been expressed at different levels, from launching a Russian cryptocurrency to banning any operations with Bitcoin, the first and most popular cryptocurrency. Until the decision is made at the top level, investment in this market will remain risky although highly profitable in the short term.

Author: Dmitry Gorbunov