Affected by the U.S. sanctions imposed on Russia since the annexation of Crimea, an aluminum plant in Russia will now turn to cryptocurrency mining after being forced to shut the facilities in 2018. The company behind the Nadvoitsy Aluminum Plant leased the facility to a cryptocurrency mining firm named ‘Russian Mining Corporation’ (RMC). The news was first released on the 29th of October by the Russian news platform RBC.
The final blow to the aluminum plant was the U.S. Office of Foreign Assets Control (OFAC) imposed sanctions which were introduced in April last year. Primarily imposed on the company Rusal, the U.S. Treasury Department gave a moniker to the major shareholder of the company Oleg Deripaska ‘Designated Russian Oligarch’ and issued sanctions to the firm.
The RMC cryptocurrency mining startup will not rent a minor part of the plant and will utilize the cheap power that the plant provides, along with a significant size of free space. The startup intends to mine a significant number of Bitcoins in partnership with a cryptocurrency exchange named Cryptonex, which is based in the United Kingdom.
The founder of the company Dmitry Marinichev stated that the company wants to achieve the goal of capturing 20% of the entire bitcoin mining market. According to a report by RBC, Russia represents 10% of the global bitcoin mining capacity.
In an interview with the RBC, Marinichev stated: ‘Now the Rusal plant is unprofitable, the electricity supplied to it is practically not being utilized, and people living in the single-industry town near the plant have nowhere to work.’ According to the founder, the idea of the company is to entirely change the plant and sell the computing power it produces as a service.
As stipulated in the partnership agreement, the UK-based exchange Cryptonex sent 42 million exchange tokens (CNX) to the mining startup. The total value of the tokens is estimated to be around $85 million. Furthermore, the exchange will also pay for the new cryptocurrency mining equipment that the startup requires to become fully operational.
The Euro-Asian region leads Bitcoin mining
The cost of electrical power represents one of the most important aspects that ultimately decide whether cryptocurrency mining will be profitable or not. Countries such as Russia and China have one of the cheapest electrical power costs in the world, making it easy for startups and individuals to profit on their investment.
Besides the price of electrical power, the huge amount of space required to hold the mining equipment is also a significant factor. As it is easier and cheaper to rent in countries such as Russia, the costs of running a mining firm are even cheaper. Ultimately, some places in the world are simply more cost-effective. Despite the regulatory and political pressure on cryptocurrencies in China, the nation still remains as one of the largest bitcoin mining contributors.