The collapse of the global market indirectly benefited Russia's bitcoin miners, despite the cryptocurrency price collapsing driven by the general trend. This is because the Russian national currency quickly lost value, dropping from 60 rubles per dollar to 80 in two weeks.
In addition to the coronavirus pandemic that weighs on all markets, the ruble also suffered a blow from the price war started by Saudi Arabia, which reduced the price of oil, Russia's main import resource, to its lowest level. low in three years.
With the collapse of the ruble, the average price in Russia for electricity, one of the biggest costs for miners, also decreased. In Siberia, the main Russian region for mining, the average price of energy available for local mines has dropped from 5 cents per megawatt per hour to 4.
Mining activities in Russia are mainly concentrated in Siberia, where low temperatures for most of the year provide natural cooling and electricity is cheaper than in other parts of the country due to the abundance of hydroelectric power plants.
The advantages of the BTC - Ruble pair
At the same time, the price of bitcoin (BTC), although plummeting, is still calculated in US dollars, which makes the market a little less painful for mines in Russia. In other words, with bitcoin trading around quota $ 6.000, if I sold bitcoins for rubles the price would be 6.000 times 80 rubles, not 60 rubles as it would have been two weeks ago.
"Since the price of the cryptocurrency is tied to the US dollar, the fall of the ruble is beneficial" for miners, said Alexander Shashkov, founder of Intelion Mining. Igor Runets, CEO of Bitriver's mining facility in Bratsk, Russia, said he signed two new contracts with miners last week for a total of 24 megawatts per hour of electricity. All of the company's expenses are in rubles, Runets says, so "with the ruble falling, Russia is strengthening its position in the [mining] market."
Looking at the future
Russia is also planning to use forward spread contracts to buy dollars at an agreed price in the future to protect itself from a possible ruble growth. Bitriver is now in talks with one of the Russian banks on the purchase of these contracts, Runets said.
“The exchange rate of the dollar does not affect the price of electricity. Wages and other costs don't go up as quickly either, "said Zakhar Fedorov, director of business development for Cryptoreactor, another mining company in Bratsk.
However, his company has not yet seen new customers coming from abroad. "We have requests from foreign miners, but no more than usual. Due to the slump in bitcoin prices and the hysteria around the coronavirus, in such a situation many prefer to look at more traditional currencies, "added Fedorov.