link3675 link3676 link3677 link3678 link3679 link3680 link3681 link3682 link3683 link3684 link3685 link3686 link3687 link3688 link3689 link3690 link3691 link3692 link3693 link3694 link3695 link3696 link3697 link3698 link3699 link3700 link3701 link3702 link3703 link3704 link3705 link3706 link3707 link3708 link3709 link3710 link3711 link3712 link3713 link3714 link3715 link3716 link3717 link3718 link3719 link3720 link3721 link3722 link3723 link3724 link3725 link3726 link3727 link3728 link3729 link3730 link3731 link3732 link3733 link3734 link3735 link3736 link3737 link3738 link3739 link3740 link3741 link3742 link3743 link3744 link3745 link3746 link3747 link3748 link3749 link3750 link3751 link3752 link3753 link3754 link3755 link3756 link3757 link3758 link3759 link3760 link3761 link3762 link3763 link3764 link3765 link3766 link3767 link3768 link3769 link3770 link3771 link3772 link3773 link3774 link3775 link3776 link3777 link3778 link3779 link3780 link3781 link3782 link3783 link3784 link3785 link3786 link3787 link3788 link3789 link3790 link3791 link3792 link3793 link3794 link3795 link3796 link3797 link3798 link3799 link3800 link3801 link3802 link3803 link3804 link3805 link3806 link3807 link3808 link3809 link3810 link3811 link3812 link3813 link3814 link3815 link3816 link3817 link3818 link3819 link3820 link3821

Forget oil, Russia goes crazy for cryptocurrency

Forget oil, Russia goes crazy for cryptocurrency

Forget oil, Russia goes crazy for cryptocurrency

 

MOSCOW (AFP) — Standing in a warehouse in a Moscow suburb, Dmitry Marinichev tries to speak over the deafening hum of hundreds of computers stacked on shelves hard at work mining for crypto money.

"The form of currency we are used to is about to disappear," predicts the 42-year-old entrepreneur, who also works as President Vladimir Putin's adviser on internet matters.

Marinichev is one of Russia's leading crypto-businessmen at the helm of operations in this facility larger than a football pitch located in a former Soviet-era car factory, which collects virtual money on the accounts of its clients.

Individuals, or firms like Marinichev's, provide the computing power to run the so-called blockchain which records the world's virtual money transactions. In return for providing that service they receive virtual money, of which bitcoin is the most popular, as payment — a process bitcoiners call "mining".

Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies not backed by governments or central banks that are increasingly used for goods and services on the internet.

The hunt for virtual currencies is accessible "to anyone who may be hardly familiar with computer science," Marinichev said. "It's no more complicated than buying a cellphone and connecting to a mobile network." The practice has become so popular in Russia that computer stores in the country have run out of graphic and video cards developed for gamers but are used by bitcoin miners to boost the processing power of their home computers.

Marinichev this week unveiled a more sophisticated setup, inviting investors to pitch in US$100 million to join a mining club and develop a Russian mining chip called Multiclet through his startup.

"The explosion of virtual currency value has made mining profitable enough to make it a professional activity," said Sergei, a 29-year-old computer scientist who runs half a dozen graphics cards plugged into the electrical grid of the company where he works.

He launched his mining operation in March, when the value of bitcoin and its main competitor ethereum, created by Russian-Canadian Vitalik Buterin, reached record heights on the currency's exchange.

Since the beginning of 2017, bitcoin has quadrupled in value, surpassing US$4,000 at the weekend, while ethereum experienced a rise of 4,500 per cent to hit a record of US$374 in June, later falling to US$268 in August.

While the assembly of a mining operation is easy enough, it consumes a large amount of electricity, which can reach the equivalent of several households' needs.

"All my friends who were interested in Bitcoin or ethereum built their devices and plugged them into their corporate networks, and I did the same," Sergei said. "Others cut into the municipal electrical cables."

Russia has a competitive advantage as an environment for mining, as Marinichev points out in a brochure for prospective investors: electricity here costs just 1.3 US cents per kilowatt hour while long winters save money on cooling systems.

Authorities in Russia were long suspicious of virtual money but have now come to recognise it as a force. A new bill is set to be debated this autumn which aims to regulate the possession and creation of crypto currency in the country.

The legal foundation for virtual money has so far been non-existent in Russia and it is associated with illicit activities like hacking and used to purchase drugs on the dark web.

"There is now an understanding at the highest level in the country that virtual currencies are not an absolute evil but a possible good, especially for the economy," said Marinichev.

Putin in early June even held a meeting at an economic forum with Buterin, the 23-year-old creator of ethereum, who lobbied the Russian president to expand the currency's use in Russia.

Last year, Russia's largest banks tested the platform for some of their transactions. The country's central bank even pondered development of a "national virtual currency".

Though at all-time-high in August at US$116 billion, the global cryptocurrency market is still quite young, volatile and prone to speculation.

Bitcoin, for example, lost almost a third of its value between mid-June and mid-July, before gaining it back over the course of a week. Since then, it has been regularly breaking records.

"The rush to virtual money is not a fad or a fleeting phenomenon. The virtualisation of our lives is a market process that has gone on and will continue," Marinichev said.

In a sign of the times, several cafes and restaurants in Moscow this summer began to accept payments in virtual currencies.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Source: The Straits Times

Alan Zibluk Markethive Founding Member