While Russia is preparing to legalize Initial Coin Offerings (ICO), one of its local companies is planning to raise around $100 million USD through ICO in the hopes of challenging China’s giant Bitcoin mining farm.
Early this month, Dmitry Marinichev, the Internet ombudsman to Russian President Vladimir Putin‘s office, announced his plans to raise $100 million USD to help fund the Russian Miner Coin (RMC), that he co-owned, in establishing the country’s first Bitcoin mining farm.
According to reports, the Russian Miner Coin will be holding an initial coin offering and will issue RMC tokens in exchange for Bitcoin and Ethereum to aid in building the infrastructure needed to operate a mining farm in Russia.
A report from Bloomberg confirmed that the new tokens would have 18 percent rights of the revenue earned within company’s mining equipment.
Russia’s Ambitious Bitcoin Mining Farm
Further reports stated that RMC is planning to use Russian-designed semiconductor chips in their satellites to minimize the power consumption of computers utilized in cryptocurrency mining. In a news conference in Moscow, Marinichev said:
“Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future.”
Marinichev went on to say that $10 million USD of the proceeds from the ICO will be used to develop the processors further.
Currently, Russia has 20 gigawatts of excess power capacity. Its consumer electricity prices can go as low as 80 Kopeks or 1.3 cents per kilowatt hour, which is considerably lower than China’s.
A part of RMC’s Bitcoin mining farm plan is to challenge China’s Bitmain Technologies Ltd. by taking advantage of Russia’s lower power prices. To do so, the company will be installing mining computers based on Bitfury chips in individual Russian households.
This move would apparently give Russia an edge over China since power consumption is considered one of the biggest costs related with running a bitcoin mining farm.
As most people know, Bitcoin mining requires an enormous amount of power to generate new tokens and add new transactions to the blockchain. As of writing this, miners are said to get around 12.5 Bitcoins as a reward for discovering or unlocking a block.
That’s approximately $54,000 USD, exclusive of other fees and incentives awarded by users to miners. Of course, individual miners are typically only receiving a fraction of the payout for each unlocked block in the chain, as their computational power is only a fraction of the power needed from several miners to unlock each block.
Russia in Joining the ICO Mania
Why do startups choose ICO over IPO?
Unlike the traditional IPO which guarantees a buyer a share of the company’s stocks, ICO awards virtual tokens unique to the issuing company or network. The said tokens will grow in value only if the business is proven feasible.
Furthermore, ICOs can raise millions of dollars within hours of launching. Often, due to good ideas presented by startup owners and the accompanying white papers. According to a report from CNN, during the first half of 2017, ICOs were able to raise over $1.2 billion USD.
Currently, RMC’s initial coin offering is viewed by many as a viable solution to achieving the $100 million USD funds needed by Russia to snatch the Bitcoin mining farm crown from China.