The mining market is growing by leaps and bounds. In large cities, there are practically no places and no technical capabilities to create new data centers. It is not profitable to place equipment in megacities due to the constant increase in electricity rates.
In such a situation, many representatives of the crypto mining industry look with interest to the Far East and Siberia. What prospects open up before them in the snowy expanses of the Russian Federation?
In Russia, the peak of popularity of mining hotels, as well as the emergence of the digital asset mining market, dates back to 2017. During this period, many enterprising businessmen began to rent empty premises to miners, providing them with electricity, security and technical support. The farms grew like mushrooms until the bitcoin price crashed to $6000. A prolonged crypto winter began.
Many mining hotels did not survive the difficult period and simply closed, for example, St. Petersburg Crypto Shakhta, Bitrail, BitMineCorp. But those that stayed afloat now speak of an increase in demand for their services.
But there are not enough places. According to Ivan Pozdnyshev, Head of Blockchain at the Vekus Information Technology Center, in late spring 2021, all sites were full. Now the company is expanding the old ones and building new ones, but it is not so easy, because many standards and technical requirements have to be observed.
Do not forget about the high cost of electricity in megacities, compared to some inland cities. When placing equipment in a legal mining hotel in St. Petersburg, you will need to pay a little more than ₽7 for 1 kWh (depending on the location). In Moscow, this figure is slightly lower: from ₽6.44 to ₽7.
That is why many miners choose regions where electricity is much cheaper, for example, Irkutsk or Krasnoyarsk. Affordable electricity in these areas can be obtained near the stations that generate it. For example, for BitRiver, a leader in the mining hotel industry, electricity costs ₽2.4 per kilowatt. Wholesale customers who lease large areas and capacities pay ₽3.5 per kilowatt.
The Chinese have already become the most typical client of mining hotels in the Far East: they are legally prohibited from mining cryptocurrencies in their country. Thus, they “load” with equipment all the free capacities of data centers in the Russian Federation. Some hotel owners even shun small earners, focusing on the big players in the Middle Kingdom.
What is a mining hotel?
Choosing a site for placing equipment, you need to understand what a mining hotel is, at least in order to avoid unnecessary worries due to the possible transfer of your property to dishonest traders. In fact, a mining hotel is a specially equipped room in which cryptocurrency mining equipment can safely operate.
High-quality cable routing and connection to an industrial power supply are essential. However, the equipment will require step-down transformers and adequate internal wiring to function.
Evgeny Khalikov, owner of Cryptoindustriya, a provider of mining equipment, estimates the total cost of a data center equipped in accordance with the minimum requests at Rs 5 crore. A completely full site will cost the customer at least 10 million rupees.
According to experts, the downright rubbish cost of rent and electricity fees is a clear indicator of a site operating illegally.
Is mining profitable today?
According to the calculations of Michael Jerlis, CEO and founder of EMCD, $8,000-11,000 can be considered the minimum threshold to enter the market today. This money will be enough for equipment, and it will be paid next year if it is placed in a mining hotel.
For example, when choosing an ASIC, you will have to spend $10,000–11,000 on a higher powered device (Antminer S19) or several lower powered devices (Watsminer N21S). However, the user can immediately connect it to the power outlet, the Internet and the pool and start mining coins.
If you use video cards, you will need 8 pieces to start the process and mine coins in sufficient quantities. Such a farm will cost $7,500-12,500, depending on the devices purchased. Its main advantage is the ability to optimize and resell used video adapters, which eventually cease to cope with their assigned tasks. If you use ASICs, then after they become obsolete (after only 2-3 years), working with them becomes unprofitable, and it is impossible to use them for other purposes.
According to Bitfury CEO Vadim Krutov, each bitcoin miner can independently calculate the break-even point. To do this, the following factors must be taken into account:
- With an average equipment energy efficiency of 45 J/TH and an electricity cost of $0.04 per kilowatt, the cost of mining 1 bitcoin will be $7,000. These are the indicators of an average (ordinary) miner.
- The strongest players use equipment with an energy efficiency of 30 J/TH and pay around $0.025 per kilowatt of electricity. For them, mining 1 BTC costs $3,000.
- Weaker market participants using old equipment (2016-2017) spend about $25,000 to mine a bitcoin.
What to mine in autumn 2021?
There have been no significant changes in this regard since the beginning of the year. Bitcoin and Ethereum are still the most profitable cryptocurrencies. The choice of a particular currency depends on the equipment used.
There is no alternative to BTC when working with industrial miners. Retail GPU miners tend to prefer ETH for the most part. But after the complete transition of this cryptocurrency to PoS, his team will switch to other coins: ETC, Grin, Zcoin, Raven, Beam.
The specific choice will be determined by the profitability of each of them at the time when Ethereum PoW mining becomes impossible.
In short, despite the high entry threshold, mining is still relevant. Today, there is an obvious trend towards the centralization of mining, the exclusion of small players from the market, as well as the active creation of sites in the Far East and Siberia, thanks to comfortable rates and weather conditions.
It seems that the day is not far off when the Russian miners in the big cities will finally drive the Chinese “farmers” out of the vast expanses of eastern Russia.