When asked to think of Siberia I would expect the majority of you would envision barren and remote tundra, snowy plains interspersed with frozen lakes and tall pines.
The American travel writer Ian Frazier once said, “Siberia is so big, it’s almost more an idea than a place.”
It’s perhaps one of the last places on Earth that you would expect to be the home of an emergent crypto industry.
But, that is where you would be wrong.
Russian crypto mining firm CryptoUniverse is planning to open a facility in the remote province in mid-2019.
Not only offering crypto mining, it will act as a data center for artificial intelligence, big data and companies operating in the Internet of Things space.
So, why is Siberia so suited to crypto mining?
Firstly, the climate in the region is perfect to house the energy-intensive industry. In order to mine crypto, a user must purchase dedicated computer hardware with a graphical processing unit (GPU) chip or application-specific integrated circuit (ASIC).
They have to also buy a device to cool the hardware, a constantly running internet connection and a mining software package. All of these devices generate an enormous amount of heat.
So much so that the Paris-based firm Qarnot Computing has developed a ‘crypto heater’, called the QC-1, that uses the heat generated from mining crypto to heat homes at the same time.
Others have gone further. A Canadian entrepreneur, Bruce Hardy, is using the heat generated from his crypto mining software to provide warmth to grow basil and lettuce in the same building.
The continental subarctic climate in Siberia means that mining firms do not need to use up more costly energy cooling down their machines with an annual average temperature of around -41 Fahrenheit.
Therefore, basing operations in the Russian province is cost-saving and is one of the major reasons behind the emergence of other crypto mining hubs in other regions of the world with low average temperatures, such as Canada and Iceland.
Endless energy?
Secondly, despite savings on cooling machinery the crypto mining industry is incredibly energy intensive.
Bitcoin mining alone is thought to have used up as much energy as the entire nation of Greece in 2017.
In 2018, a Digiconomist study found the computers and networks that power Bitcoin mining had consumed 29.05 TWh of energy that year – 0.13% of the entire global electricity consumption!
This would rank Bitcoin mining 61st in the world for energy consumption if it is an independent country.
As a result, crypto miners are looking to nations with an abundance of cheap energy, making Russia a prime candidate.
The vast nation has the world’s second largest coal reserves and is the second largest oil producer – number one in Europe.
Thanks to these enormous supplies, gasoline supplies in Russia are currently the cheapest in Europe and the 10th least expensive in the world.
Therefore, electricity costs in the country are thus also some of the lowest in Europe with Siberia the cheapest in all of Russia at only 0.97 rubles/kwh ($0.015/kwh).
Once again, basing a crypto mining business in the region is incredibly cost effective.
Land ahoy!
Thirdly, given how sparsely populated – three people per square kilometer – but large in physical geographical area – 13.1 million km² – there is an abundance of cheap land for crypto miners.
There is so much uninhabited space that in 2016, Russian President Vladimir Putin gave Russian citizens a 2.5 acre plot of land in the state for free if they moved there.
Russian land is far cheaper than in other parts of Europe or the Americas.
The very highest price of a hectare of land in the entire country was found in the Krasnodar region in the south of the country at $1,700.
Similar land abroad was much higher.
In Germany and France it was around $11,300 per hectare, in the United States $9,000 and in Eastern European countries it was around $4,500.
Land is so cheap that Chinese investment firm Huae Sinban signed a $448 million deal in 2015 to grow crops and rear livestock in Siberia as it was cheaper to do so than at home.
“Looking at the data, we can say there’s good and bad news,” said the executive director of Sovecon, Andrei Sizov. “The bad is that supply of land in Russia greatly exceeds demand, while the good is the potential for runaway growth in value.”
For crypto miners, however, it is all good news with the opportunity to purchase a large swathe of land for their operations at a budget price.
Opportunity knocks
CryptoUniverse is heading firms interested in opening a crypto mining facility in Siberia.
The firm already runs the largest mining center in Kirishi, near St. Petersburg but the new Siberian crypto mining center will operate on 6,000 mw of cheaper electricity and with even more space at 8,000 meters squared.
CryptoUniverse hopes that consumers will save up to double or triple the amount they would be paying even elsewhere in Russia to mine Bitcoin.
"We have already built a data center near a power station, where we will receive extremely advantageous conditions for the wholesale supply of electricity," said Anton Makarchuk, the Chief Marketing Officer of CryptoUniverse.
Consumers from around the world will be able to either install their own mining equipment - such as the ASIC Bitmain AntMiner Sq - or remotely rent those belonging to CryptoUniverse.
A further advantage is that the firm's dedicated technical and security staff are always on hand to ensure the smooth running of a mining operation, so an investor does not need to relocate or commit hours of their day to maintaining their business.
Once the Bitcoin is successfully mined it is then paid directly to the customers' wallets every 24 hours, where it can be withdrawn immediately, cutting out any middle-men
"The low cost of electricity is the main reason why we build our data center in Siberia," concluded Makarchuk.
"The industrial infrastructure is also unclaimed and the territory suitable for building a data center can be obtained at a very favorable price if you have the support of the government of the desired region.
"Cold winter and not very hot summers also make mining more profitable but the main reason is the cost of electricity and the availability of infrastructure."
