Russia Squares Off with China in Battle for Bitcoin Mining Supremacy

An aide to Russian President Putin seeks to raise $100 million through an ICO of his company in a bid to help dethrone China as the country with the biggest Bitcoin mining industry. Putin has warmed up to blockchain technology, Ethereum in particular, and has extended support for its adoption through the help of local partners. Many believe that these developments indicate Russia’s predisposition to replace USD with Bitcoin as a reserve asset.
Karan Kapoor
Posted by Karan Kapoor August 9, 2017 3 Mins Read
An aide to Russian President Putin seeks to raise $100 million through an ICO of his company in a bid to help dethrone China as the country with the biggest Bitcoin mining industry. Putin has warmed up to blockchain technology, Ethereum in particular, and has extended support for its adoption through the help of local partners. Many believe that these developments indicate Russia’s predisposition to replace USD with Bitcoin as a reserve asset.

An aide to Russian President Putin seeks to raise $100 million through an ICO of his company in a bid to help dethrone China as the country with the biggest Bitcoin mining industry. Putin has warmed up to blockchain technology, Ethereum in particular, and has extended support for its adoption through the help of local partners. Many believe that these developments indicate Russia’s predisposition to replace USD with Bitcoin as a reserve asset.

Russian Miner Coin

One of Putin’s aides on all matters pertaining to technological security co-owns a company seeking to raise $100 million worth of Bitcoin and Ethereum by holding an initial coin offering for its token, Russian Miner Coin. On its website, RMC claims that their investors will own rights to 18% of its total revenue earned using the company’s mining equipment. Russian official Dmitry Marinichev said, “Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future.”

BTFO China?

RMC has adopted a two pronged strategy to accomplishing their goal of usurping China’s dominance in the mining of digital currencies. Firstly, they plan to make full use of Russia’s lower power prices vis-a-vis China: Not only does Russia produces 20 GW (gigawatts) of surplus power capacity, but it also has very cheap consumer electricity prices at only 80 kopeks (1.3 cents) per kWh (kilowatt hour). Secondly, the company plans on using Bitfury chips in Russia for mining.

The founder of Bitfury Group is Valery Vavilov, a Latvian with ties to Russia. Bitfury also happens to be the biggest rival to Bitmain technologies, which is China’s largest producer of mining computers. Eventually, RMC will seek to produce semiconductor chips in Russia itself that it can then use to reduce the power consumption involved in crypto-mining. They aim to devote 10% of the ICO proceeds towards the creation of these processors to achieve quick results.

Russia’s Tryst with Blockchain

President Putin has been very receptive of the nascent asset class of cryptocurrencies and has been particularly charmed by its underlying blockchain technology, specially Ethereum. With Russia going through its worst recession in recent history and facing decreasing revenues from oil and gas, Putin is believed to have earmarked Ethereum as the potential tool to rejuvenate the country’s economy.

The Kremlin’s website even mentions that after meeting with Ethereum’s founder Vitalik Buterin in June, Putin extended overwhelming support to the youngster to implement blockchain technology in Russia with the help of local partners. Russia’s Central Bank has already rolled out a pilot project built on blockchain that has the capability to process online payments and verify customer data with lenders.

Reaction

The general consensus about this development is that this would not have happened without Putin’s backing and blessing. This move has coincided with Bitcoin breaking all-time high records and crossing the $3500 mark, which has raised a few eyebrows. Some have suggested that this is the most obvious indicator yet that Putin aims to use digital currencies to replace US Dollars as a reverse currency/asset.

Cynics argue that such large scale Bitcoin mining by the Russians might just be a mask for laundering money in the country notorious for corrupt oligarchs. Regardless, Russia’s embrace of the world of cryptocurrencies and blockchain technology comes as great news for the crypto-verse as it can only result in a greater adoption of the financial technology.

What do you think about Russia’s move to rival China in bitcoin mining? Do you think they are adopting the correct strategy? What do you believe are the ulterior motives behind Putin’s interest in this new fin-tech world? Let us know in the comments below.

Images courtesy of Wikimedia Commons

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