The cryptocurrency market has entered a distinct bearish phase, with Bitcoin’s price slumping from nearly $20,000 to as low as $8,300. Nevertheless, Russia’s army of crypto miners is growing steadily, as is the number of so-called mining hotels. Since the beginning of 2018, mining hotels in the country have multiplied by six times, according to research conducted by Youla, a Russian platform for free advertisements.
Home-based miners find it hard to store the noisy, energy-hungry equipment in their flats and seek alternative and cost-effective ways to run their business. Offices are typically too expensive and not always available for individuals, so mining hotels have emerged as a cheap and convenient alternative.
Igor Zartdinov, CEO of Enigma and co-founder of cryptocurrency fund ICG, explains that flats, houses, or garages are not suitable for mining farms because the equipment is too large, the noise is too loud, and electricity consumption is very high. Moreover, it requires specific temperature conditions and cooling systems.
“The premise should be dry and well-ventilated to prevent the equipment from overheating, with stable, fire-proof power supply system,” he added.
The average cost of “accommodation” in such a hotel decreased from 3,700 rubles (about $65) to 2,550 rubles ($47) per month as supply growth outpaced demand in March. Saint-Petersburg has the largest number of advertisements offering mining hotel services at an average cost $52-$70 per month. Youla found the cheapest hotels to be in Ivanovo (about $18) and the most expensive ones in Tumen (nearly $90).
Mining hotel costs do not include electricity consumption, which may substantially increase the bill. Based on the average electricity rate, the cost of mining one bitcoin in Russia amounts to $4,600, according to Elite Fixtures research. It means that Bitcoin mining is still profitable in Russia although the situation may change if parliament approves the so-called Digital Assets Law, which may introduce taxation for miners.