Russia Becoming a Major Bitcoin Destination

Russia Becoming a Major Bitcoin Destination

Two electric power stations in Russia have been sold for the purpose of cryptocurrency mining, the Kommersant newspaper reported, citing sources. It is the first such deal in the country.

The two power stations are in Perm Region, on the western slopes of the Middle Ural Mountains, and in the neighboring Republic of Udmurtia. The facilities will be used to create a data center and a center for cryptocurrency mining, the newspaper reported. The stations were reportedly sold for about 160 million rubles (about US$3 million).

The reported new owner of the power stations, businessman Aleksey Kolesnik, has indirectly confirmed the acquisition, but said that cryptocurrency mining will only be possible after Russia adopts the relevant legislation.

Russia currently has no laws on digital money. The government is mulling over how to best regulate cryptocurrencies, with Deputy Finance Minister Aleksey Moiseev suggesting in December that mining bitcoin and other forms of online money would be illegal, but buying them or trading them would remain within the law.

There is no single opinion about cryptocurrencies in Russia. Some call them money surrogates, and their issuance is of concern as the turnover of the currency in Russia is a criminal offense. Other deputies say that cryptocurrencies are a way of bypassing Western sanctions and have even suggested building a town for cryptocurrency mining.

President Vladimir Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, and initial coin offerings, as well as defining everything that relates to digital money, by July.

Major Bank in the Mix

Sberbank, the biggest lender in Russia, has announced the launch of a lab that will work on blockchain projects. The technology which drives bitcoin and other cryptocurrencies is known for that reason, but has many other uses.

“Sberbank has opened a blockchain laboratory which will test cutting-edge blockchain technologies, generate ideas to develop blockchain-based solutions, create product prototypes, carry out pilot projects, and implement applied business solutions for Sberbank Group,” the Russian banking major said in a statement.

Blockchain technology was initially treated with skepticism by banks, but things have changed dramatically.

The technology can improve the efficiency of clearing and settlement, make cross-border payments faster and cheaper, significantly cut red tape and modernize customer identification systems, many banks have acknowledged.

“Blockchain can considerably reshape many business areas related to the financial market, as well as classic activities of the bank and our clients,” said Igor Bulantsev, Sberbank’s Senior Vice President, Head of Sberbank CIB.”

“Mastering, developing, and implementing the most promising technologies is an important element of our competitiveness as a bank and an indispensable part of our future as a tech company. It is important to note that blockchain helps market participants cooperate more efficiently. Hence, Sberbank is making a contribution to the future of the banking industry and our country by launching the blockchain laboratory.”

Sberbank has more than 20 blockchain-based pilot projects, including joint solutions with a Russian steel major Severstal, the largest Russian consumer electronic retail chain M.video, and the Federal Anti-monopoly Service.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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