Russian mining company BitBaza reached an agreement with China’s Zhejiang Ebang Communication on launching miner production in Krasnoyarsk. The information was provided to Invest Foresight by BitBaza owners. Within a month the Krasnoyarsk Territory will create a free economic zone with easy tax terms for this purpose. The volume of investment in the new production will constitute $150 million.
Access to Siberian energy
BitBaza managed to implement a joint project with the Chinese thanks to its experience and connections. The company belongs to Artyom Zverev and Daniil Zakomolkin. Artyom Zverev, a native of Irkutsk, has been living in Shanghai for the last ten years – he’s married to a Chinese woman and speaks Chinese. His getting to know Ebang played its role in the decision of the Chinese to come to Russia.
“I know the entire Chinese crypto crowd”, says Zverev, member of the expert council on digital economy and block chain technology of the Russia State Duma Committee.
He is among the drafters of the laws that regulate the development of mining in Russia. Zverev graduated from the Tomsk Polytechnic University and worked for Transneft. So, one the founders is in charge of the foreign ties and the other is responsible for GR and other issues; obviously, this allows them to make ambitious plans for doing business with foreigners.
The project idea was publicly announced in March when Krasnoyarsk hosted a meeting between the representatives of Zhejiang Ebang Communication, BitBaza and Deputy Chairman of the Krasnoyarsk Territory Government Sergei Vereshchagin. The meeting was also attended by Chinese manufacturers of mining equipment Ding Feng and Zhu Jingming (Entu). Mr Vereshchagin stated that he supports the project of creating a centre for the development of block chains and mining in the Krasnoyarsk Territory and promised to secure a “free economic zone” (FEZ) status for two industrial parks (the FEZ status guarantees duty-free import of computing equipment and certain tax concessions).
One of these parks is located in Divnogorsk and is owned by Gigabyte company; looks like this is the place where the new Ebang miner production will be located. According to Gigabyte Director Andrei Djioyev, the park has all the necessary infrastructure and power capacity exceeding 120 MW. Krasnoyarsk is close to China, and it’s a region with energy surplus – electricity is cheap here, just over RUR 2 per kWh, while in China it exceeds RUR 3.5 per kWh. Apart from cheap electricity, industrial parks are also connected to the Federal Grid Company of the Unified Energy System of Russia (FGC UES), which allows increasing energy consumption without investing in step-down transformer substations (about RUR 100 mio per 100 MW). BitBaza owners believe that this is the ideal platform for securing energy capacity with lots of cheap and accessible electricity. Thus, Irkutsk can take the side line and let Krasnoyarsk become Russia’s mining capital.
“Today China tries to limit energy capacity made available to miners. There is a limitation of up to 4 kWh per legal entity, while before it used to be five times this figure”, says BitBaza co-owner Artyom Zverev. This explains the manufacturers’ desire to be in a place where no such limitations exist.
Ebang outstrips
The interesting thing is that Krasnoyarsk plans to assembly miners using Russian parts, with only the chips coming from China. Ebang produces 10-nanometre chips in South Korea, however, it doesn’t advertise it. Its super new generation Ebit Miner E10 miners exceed Antminer S9, the most powerful ASICs of the major miner producer, Chinese Bitmain company, in terms of bitcoin mining speed. Production organisers see their task in ensuring that the miner price does not exceed the one offered by Bitmain.
The volume of investment in Ebang miner production will stand at $150 million, and it’s unclear what share will come from BitBaza. Project initiators promise to get 30,000-100,000 miners per month. The market for that will be the whole world. Preparations are currently underway for the new production that will be launched this year. The Chinese not only want to produce miners – they also want to mine. It was impossible to get any on-the-spot comments from Zhejiang Ebang Communication.
BitBaza will invest 3.5 billion rubles in a mining farm located in a park in the Krasnoyarsk Territory which could well become the largest in Russia. And the company doesn’t plan to stop at this point. Zakomolkin dreams of creating a financial assistant, a neuronetwork that will work at data centre created by BitBaza in the Krasnoyarsk Territory.
“I will fire my financial advisor and will have IA work instead,” Zakomolkin promises.
From 2013 to 2017 BitBaza already delivered over 20,000 miners within Russia and the CIS; it also has mining farms in Moscow, the Moscow Region, Irkutsk (for 10 kWh) and in China (for 12 kWh).
The market
In Russia miners are assembled by RMC company owned by Internet ombudsman Dmitry Marinichev, Sergei Bobylev and Boris Zyryanov, as well as Facemen FM2018-BT400 mining farms of Facemen Technology, a company belonging to Alexander Anokhin, an entrepreneur from Cheboksary. These computing machines are assembled from various parts, including Russian-made.
But “nobody in Russia produces chips, and this is the main thing one needs for mining. Facemen, Sunrise and Pantech use Bitfury chips”, says Alexander Pakulayev, managing partner of Infinite Energy mining centre.
Bitfury opened an office in Moscow to develop block chain projects but not the production. Bitmain launched its service centre in Irkutsk and will probably assembly its computers in Russia.
By Natalia Kuznetsova