Cheap electricity makes Siberian city of Irkutsk the Russian capital of bitcoin mining

IRKUTSK, RUSSIA (RECENT – AUGUST 31, 2017) (REUTERS) – Russian Siberian city of Irkutsk has recently seen increased interest in crypto-currency mining due to the cheep energy prices in the region.

Bitcoin, the most popular crypto-currency today, is controlled not by a state but by an underlying algorithm by which participants can “mine” bitcoins through solving mathematical problems. The universe of miners can then validate “blockchains” of bitcoin transactions by majority vote, weighted by their mining effort. As a reward, miners receive more bitcoins, distributed randomly.

The main part of the expenses for mining apart from hardware prices go to electricity powering mining farms. Large Siberian hydro-electric power stations create energy surplus in Irkutsk region allowing providers to keep prices at a rate several times lower than in the European part of the country.

Yury Dromashko the owner of one of the largest bitcoin farms in Irkutsk called the city a mining capital of Russia, adding that he estimated the miners’ community in Irkutsk to be several thousand people.

Regional ministry of economic growth said Russian legislation does not cover this sphere so far.

“We just follow the legal principle: what is not forbidden is allowed,” said deputy minister Yevgeny Vasichenko, adding that large-scale investors will be able to benefit from the benefits of the local special economic zone including reduced energy rates in exchange for tax liabilities.