Russia has unveiled the world’s largest crypto mining farm, set in the icy tundra of Kirishi. Roughly 115km from St Petersburg, this sleepy little town has an abundance of cheap electricity and arctic-like weather year-round. These two factors have made Kirishi the perfect destination for Austrian mining firm Cryptouniverse. The first crypto mining building has been erected on site and spans an incredible 4000 sqm. Inside this giant warehouse stands more than 3000 mining rigs with a power capacity of over 20mW. This mining capacity is set to increase in the coming months, putting the company even further ahead of Bitmain.
More Miners Needed
Due to the increasing cost of mining Bitcoin – coupled with the falling prices of Bitcoin – crypto miners are having to suspend their operations. This then has a negative impact upon the Bitcoin network, as large mining companies such as Bitmain edge closer and closer to controlling the majority of the Bitcoin network hash rate.
Once a company controls 51% or more of the total network hash rate, it can then essentially rewrite history and make up transactions – causing chaos to the crypto world. It would make a decentralized cryptocurrency centralized, with there likely to be a huge crash in the price as a result. For these reasons, crypto enthusiasts somewhat fear a mining pool or firm getting close to the threshold. With more miners shutting their operations, these companies get closer to controlling the majority, meaning more miners are needed to keep the balance of power evenly distributed.
Network Hash Rate Still Climbing
Interestingly, the total Bitcoin network hash rate is still climbing, even with rising electricity costs and falling Bitcoin prices. This can be attributed to the fact that crypto mining rigs can take up to six months to ship. Meaning that the current rise in Bitcoin hash rate is a delayed reaction to the huge pump Bitcoin saw at the end of 2017. Unfortunately. This delayed reaction has caused the price versus difficulty level to become uncoupled, so it is causing a situation whereby miners cannot afford to mine Bitcoin. Eventually – as the price of Bitcoin recovers – we should see these two correlations couple back up and Bitcoin mining will once again become financially viable.
Russia Implementing Legal Framework for Cryptos
Away from the mining, the Russian government has been hard at work creating regulations for cryptocurrencies and blockchain companies. Just recently, the Russian government revealed that it was going to trial a blockchain voting system to stamp out election rigging claims, hinting that they are about to roll out their new legislation. In the next Autumn session of Duma – a Russian legislative assembly – it is expected that crypto-friendly bills will be rolled introduced into law and these will include a wide range of regulations. We can expect to see a tax structure put in place for cryptocurrencies – making Russia one of the first countries to do so – and some new laws similar to Malta, whereby blockchain and crypto companies are welcomed to the country with open arms.
While this new crypto farm in Russia might be the largest by size, it is still in the process of working its way towards being fully operational. Thanks to its vast belts of countryside that remain uninhabited due to the arctic-like weather conditions, crypto mining – if given favorable regulations and laws – could begin to thrive in Russia. Who knows, if things progress positively we might eventually start to see a shift in mining power away from China and towards Russia.