Cryptocurrency Farms in Russia’s Oil Fields Hit 85 MW Capacity – Mining Bitcoin News

Cryptocurrency Farms in Russia's Oil Fields Hit 85 MW Capacity - Mining Bitcoin News

Experts have estimated that the cryptocurrency farms mining at Russian oil wells use 85 MW of energy. The data shows that investors are investigating projects for another 200 MW despite limitations brought on by Western sanctions.

More than a Billion Rubles in Annual Revenue Expected From Crypto Mining in Russia, Fueled by Natural Gas.

Analysts at Vygon Consulting, an independent consultancy working on the growth of the Russian fuel and energy complex, estimate that the aggregate power rating of data centers mining cryptocurrency in Russia’s oil fields is 85 megawatts, or 23% of the market.

Power for these crypto farms comes from tiny power plants that burn associated petroleum gas (APG), a byproduct of oil production that must be disposed of by the industry. They can make a profit by selling it to miners for almost little outlay of money.

About 17 billion cubic meters of APG is consumed annually by Russian oil producers to power drilling sites. The Russian business daily Kommersant cited a research by Vygon Consulting that found cryptocurrency mining was responsible for 279 million cubic meters of current use.

At an average monthly exchange rate of $20,000 per 1 BTC, APG miners made 400 million rubles (about $6.6 million) in July. At that bitcoin price, they expect to make 4.8 billion rubles ($79 million) in revenue between July 2022 and July 2023, and 1.16 billion rubles ($19 million) per year over a six-year period.

An increase in APG coin production is anticipated, albeit growth may be hampered by sanctions.

Researchers predict that the APG mining sector might expand by a factor of several. The miners’ annual income would increase from 1 billion rubles to 2.5 billion rubles if only 1.6% of the associated gas, which is currently flared, was employed in mining instead. With the potential for annual revenue of up to 30 billion rubles, the mining industry stands to grow by a factor of 25 if just a third of all flared APG is put to use in this industry.

In addition, sanctions placed over the Ukraine crisis are creating difficulties for Russia’s mining companies. Some foreign cryptocurrency exchanges do not allow customers from Russia to sign up for an account, and the European Union has restricted transactions with Russian users’ cryptocurrency wallets. One solution suggested by Vygon Consulting involves setting up a mining company in a different country.

That isn’t always a viable option, as the situation in Bitriver demonstrates. The U.S. Department of the Treasury sanctioned the Swiss-registered firm in April over fears that Moscow may exploit the minting of digital currency to monetize its energy resources. The company is a significant operator of mining data centers in the Russian Federation.

Earlier this year in June, it was claimed by Russian crypto media that Bitriver had signed a memorandum of cooperation with Gazprom Neft, the oil production arm of Russia’s energy behemoth Gazprom, to use electricity generated by associated gas at its wells. Experts from Vygon Consulting claim that oil firms have nothing to worry about with these kinds of initiatives.

This year, pilot projects to build APG-powered data centers were launched by Gazprom Neft, and by the end of the year, the company had computing infrastructure up and running at its firms in three regions of Russia. Company representatives were clear that they do not mine or trade cryptocurrencies themselves, but rather supply surplus energy to partner operations.

The research cites the difficulty Russian firms have importing the computing equipment needed for crypto mining as another example of the impact international sanctions have had on their operations. The present installed capacity of APG farms is 30–40 MW, but the road there “has become longer legally and logistically,” according to Roman Zabuga, co-owner of BWC UG and another major mining operator. Nonetheless, he thinks that investors have plans to actualize 200 MW worth of brand new, massive projects.

Orizu Augustine
Orizu Augustine is an experienced crypto writer working for Alltechcraft. Having passion for writing, he covers news articles from blockchain to cryptocurrency and iPhone and Samsung related articles.