Where to get cheap electricity for mining in Russia

Mining cryptocurrencies puts a lot of strain on machinery and requires a lot of energy. Large farms pay hundreds of thousands and millions of roubles a month for electricity. During the period of falling cryptocurrency prices, many users are unable to cover their expenses through mining. Participants who managed to optimize processes remain on the market. Those who use cheap electricity for mining earn money. In the article we will tell you how to reduce costs and increase the profitability of the business. Much depends on the choice of region (tariffs in Russian cities differ). Some miners invest in alternative energy sources – solar panels and wind generators.

Average electricity consumption by a mining farm

In 2023, users use asics and video cards for mathematical calculations. Bitcoin can only be mined on ASICs, altcoins also on GPUs. Paying energy bills is a major expense when operating a mining farm. Consumption is made up of components such as:

• Computer to manage the process – up to 1 kWh.
• Video cards (rig 6 pcs) – 0.6-2 kWh, asic – 1-5 kWh (for one miner).
• Cooling system – 1 kWh (4 fans) or 1-3 kWh (if using air conditioner).

To earn $20-30 per day, miners connect from 30 video cards (25.5 kWh), or from 2 asics (6-7 kWh). It is not economically feasible to use air conditioners. Coolers are more often used for cooling equipment.

Thus, a small home farm consumes from 4.5 to 18.5 thousand kW per month.

To reduce electricity costs, miners carry out downvolting (reduce the maximum supply voltage). This reduces the hash rate. Therefore, farm owners are looking for the optimal value, at which the performance does not suffer much. Such a setting can reduce costs by 20-30%.

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Entrepreneurs organize a business on mining – buy powerful equipment and install it in separate premises. Warehouse buildings, garages or factories are equipped with powerful heat dissipation and power cables. It is considered that at a consumption of more than 15 kW/hour, industrial mining of cryptocurrencies begins. Large farms consist of 100 or more asics and consume from 216 thousand kW per month.

The cheapest electricity in Russia

Electricity prices differ in different regions of the Russian Federation. Actual values for categories of users are published on the websites of power supply companies. Moreover, the cost also depends on the type of settlement – in rural areas the tariff is 30% lower than in cities or towns. The table contains data on cities with cheap electricity for mining. The tariffs are valid from December 1, 2022.

Legal entities can participate in local subsidy programs or conclude an agreement with a sales company for wholesale electricity supply (for a year or more). The offer is valid for entrepreneurs with large farms. The main requirement for obtaining electricity at wholesale prices is the total capacity of equipment of at least 20,000 kW and the construction of their own infrastructure (equipment for measuring and metering, server and communication channels with the regulator).

It will take about a year to enter the market under such conditions. But then you can save on bills from 1 million rubles a month.

Alternative energy sources

According to Cambridge University, the world spends 120-150 TW per year on crypto mining. This is comparable to the needs of a small country – for example, Denmark or the Netherlands. In addition, the use of traditional energy sources harms the environment.

Scientists believe that because of mining in the next 10 years, the temperature of the environment on the planet will increase by 2 degrees. Therefore, users are looking for alternative energy sources.

Solar panels and wind generators are inexhaustible and do not pollute the environment. There is another advantage – they generate free electricity for mining. This way, miners can save on costs.

Solar panels

This is a popular type of alternative energy. However, the technology has significant disadvantages:

• Dependence on the weather.
• Expensive equipment.
• Difficulty of utilization of photocells (they contain toxic substances).

Annual generation of electricity from solar panels does not exceed 2% of global consumption. This type of energy is popular in countries with high tariffs. For example, in Israel, a panel installed on the roof of a house can provide 80% of the residents’ needs. In the DPRK, Germany, UK, USA, France, and Germany, 30% of homeowners use solar panels.

In Russia, this is unjustified due to the high cost of equipment, the small number of sunny days per year and cheap electricity. For example, one Bitmain Antminer S9 asic with 13.6 TH/s performance consumes 988 kW per month and brings $680 per year, assuming 24/7 operation. Solar power requires panels, batteries, protection, controllers. Installation to power one ASIC will cost $10-12k.

Wind turbines

Turbines can convert air energy into electricity. This type of alternative energy is well developed in Europe (Denmark, Germany).

At the beginning of 2023, the total capacity of wind turbines exceeds that of nuclear power.

However, wind power is even more unpredictable compared to the sun. It is difficult to predict even for a few days. Therefore, miners rarely use this method of energy generation.

A resident of Sweden tried to attract attention to wind turbines. He organized Zcash mining in his house. The installation consisted of such elements:

• Computer.
• A 750W wind turbine and 2 batteries.
• GTX 1080 Ti video cards.

However, for bitcoin mining, this method will not work. For one ASIC Bitmain Antminer S9 will require:

• 5 kW wind generator.
• 20 batteries with a capacity of 150 Ah.

Such a set costs $5-7 thousand. It generates about 1.1 thousand kW per month at an average wind speed of 6 meters per second. Installation of wind generators is complicated by several factors:

• You need to research the wind strength on the ground. This will require mapping with the help of anemometers. They work at a height of up to 10 meters for 2-3 years. You can also use a wind map that has been compiled by the weather services.
• When working, the wind generator makes a lot of noise (30-45 dB). Therefore, they should not be installed closer than 300 meters from a residential building.
• When installing a wind turbine in rural areas on wastelands, there may be interruptions with the Internet.

Beware of scammers

The problem of high energy costs in mining has been fought for several years. Attackers use this for their own purposes. Such schemes are widespread:

• Cloud mining. Large data centers rent equipment. Thanks to electricity rebates, they can offer higher returns than with independent crypto mining. Scammers also set up a website and sign contracts. However, they do not engage in mining and pay their first clients at the expense of new ones. One of the largest such scams is HashOcean. At the time of its termination, the company had $6 million in turnover. 700,000 people lost their money.
• Fake sites of mining hotels. The lowest rates in the north of the Russian Federation (Irkutsk, Chelyabinsk). Scammers take advantage of this. They promise to place equipment in a data center and perform maintenance for a small fee. It is only necessary to pay for energy at reduced rates. After a while, the attackers stop contacting. Users lose money and expensive equipment.
• Selling devices to reduce electricity consumption. Attackers promise that after switching on, electricity bills will become smaller. In reality, this is nothing. Fraudsters will not be able to explain on what principle the unit works.
• Phishing firmware for mining. Attackers offer to download software to reduce power consumption by 2 times. Usually a virus is hidden under them, which gains access to cryptocurrency wallet passwords.

Frequent user questions

💳 In Russia, are there fines for high energy consumption in apartments?

Users need to pay their bills on time. There are no penalties. In some regions there is an increased tariff. The price is increased by 30% if the consumption is higher than the social norm of consumption. In early 2023, the authorities are preparing a bill that will prohibit the installation of powerful appliances in apartments.

📌 What is “green mining”?

Mining cryptocurrencies using the Proof-of-Work algorithm is harmful to the environment due to carbon dioxide emissions and increased heat generation. “Green mining” uses alternative energy sources and consensus algorithms that do not harm the environment.

✨ How do I choose a data center to host my tech?

You need to check the legality of electricity use and operation of the data center node. It is better to choose data centers with good transport accessibility.

📢 Is mining legal in Russia?

There is no direct ban on coin mining, but this business is in a gray zone. The state is preparing a bill on mining. Farm owners will be obliged to pay taxes and an increasing coefficient will be introduced for energy tariffs.

⚡ Is it profitable to mine bitcoin in Russia?

In 2023, the Russian Federation is among the top three leaders in BTC mining due to its cold climate and cheap energy. This allows miners to pay their electricity bills even when the bitcoin exchange rate drops to $15 thousand.

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Author: Saifedean Ammous, an expert in cryptocurrency economics.