One of President Vladimir Putin’s internet advisors plans to raise the cryptocurrency equivalent of as much as $100 million in a push to help Russian entrepreneurs challenge China in bitcoin mining.
Russian Miner Coin (RMC) is holding an initial coin offering (ICO), where investors will use units of ethereum or bitcoin to buy new RMC tokens. These new tokens will have rights to 18 percent of the revenue earned with the company’s mining equipment, according to a presentation posted on its website.
According to a presentation published in tandem with the unveiling, the team behind the effort is planning to tap as much as 20 megawatts to power their mining farm, using chips developed domestically. Bitcoin mining is an energy intensive process by which new transactions are added to the blockchain, creating new tokens – 12.5 BTC, or roughly $42,000 at current prices – as a reward for the miner.
RMC plans to use semiconductor chips designed in Russia for use in satellites to minimize power consumption in computers for crypto-mining, Putin’s internet ombudsman, Dmitry Marinichev, said at at a news conference in Moscow.
“Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future,”
He addd that $10 million from the proceeds of the ICO may be spent developing the processors.
More and more startups are offering tokens as a way to raise money upfront for digital assets in ICOs. Unlike a traditional IPO in which buyers get shares, a startup’s ICO nets you virtual tokens unique to the issuing company or network that grow in value only if the business proves viable.
The U.S. Securities and Exchange Commission last month warned that ICOs may be considered securities and signaled greater scrutiny of the sector, though it stopped short of suggesting a broader clampdown.
Today’s bitcoin mining requires special computers based on chips with minimized power consumption. China’s Bitmain Technologies Ltd. is one of the leading producers of such equipment and also runs Antpool, a processing pool that combines individual miners from China and other countries. Rival Bitfury Group, founded by Valery Vavilov, a Russian-speaking native of Latvia, produces equipment for mining virtual currencies and runs large-scale centers in Georgia and Iceland.
Russia has 20 gigawatts of excess power capacity, with consumer electricity prices as low as 80 kopeks (1.3 cents) per kilowatt hour, which is less than in China, RMC said in the presentation. The company initially plans to locate mining computers based on Bitfury chips in individual Russian households to challenge Bitmain by using Russia’s lower power prices.