Monument to Soviet Construction That Feeds Bitcoin Mining

11.05.2020

Like any other high-power computing hardware, Proof-of-Work mining rigs turn lots of electricity into lots of heat, which makes this business very sensitive to geographic location. Large mining farms and data centers tend to congregate around the cheapest electricity providers available, preferably somewhere colder.

This is a story about one such place deep in Russian Siberia where miners enjoy both the signature cold climate and the dirt-cheap power from a dam that was once the world’s single biggest electricity producer.

The Great Construction Site of Communism

The hydroelectric power plant in Bratsk has quite a few superlatives assigned to it, although some of those are now far in the past.

The massive dam 1.43 km long and 125 m high stands on the Angara River, the only river that drains Lake Baikal, the largest natural freshwater lake by volume and the deepest lake in the world. Until 1971, the 4,500 MW dam was the single biggest electricity producer in the world. Now it is at the 17th place and the list is headed by China’s Three Gorges Dam producing four times as much power.

Upon completion of the Bratsk dam, the headwater level increased by 100 meters forcing the local farmers onto less fertile lands nearby and creating Bratsk Reservoir, which was at the time the world’s largest artificial lake and was later topped by Lake Kariba on Zambezi River in Africa.

The history of the dam began back in 1954 when the construction plans have been approved and the first brigades of workers arrived at the site. At the same time, the Soviets founded the city of Bratsk, which took the name of a pre-existing settlement now resting under the Bratsk Reservoir.

Construction of the power plant in February 1960. Museum photo.

Still, the Bratsk HPP was of even greater ideological significance to the Soviets. The state propaganda called it one of the “great construction sites of communism,” an ideological cliche used for some other massive endeavors in the USSR. Involved in the construction were over 70 R&D institutes, 500 industrial enterprises, and dozens of thousands of volunteers and workers of 70 different ethnicities.

Soviet dump trucks damming the Angara in 1959. Museum photo.

The construction influenced Soviet culture as well. One of the most famous Soviet poems of the sixties is literally named Bratsk HPP. Several popular songs were written just there, and they sing praise to the people building the enormous structure.

Soviet poet Eugene Evtushenko reciting his Bratsk HPP poem in the town of Bratsk, 1964.

For those living in the area prior to the commencement of the construction, it meant the demise of their old world. The old settlement of Bratsk buried under the blue, as well as other villages flooded in the process, are known to locals as the Angara Atlantis. The only few remnants of the dead villages are now kept in a local museum. Having bereft the area of its past, the dam now stands as the sole sightseeing option for visitors (unless they are interested in the Siberian wilderness).

Still, the significance of the HPP soon faded into the general industrial background. It was followed by other “great construction sites of communism” like the Baikal-Amur Mainline which cost billions of dollars to a very arguable effect. With the dissolution of the Soviet Union, the Bratsk HPP became private. As people left the town in search of a better life, some parts of Bratsk and its plants became abandoned.

Abandoned kindergarten building in Bratsk. Source: Wikimapia

This could have been yet another story about what happens when an empire comes to ruin, had it not been for the current commercial operator of the HPP, which is still operational. In 2018, it initiated a tender for a rent of a land plot with “free power” that would be “optimal for cryptocurrency mining.” And, even though the initial tender didn’t seem to attract any bidders, in a more general sense, cryptocurrency miners did answer the call.

The Bratsk HPP dam these days. Source: Wikimedia.

Now, on the infrastructural remnants of a “great construction site of communism,” the engine for a new crypto-economy is operating. These are the country’s largest mining farms.

Heavy Computation In Siberia

The subarctic climate of the region brings long harsh winters and the Angara river hydroelectric station cascade brings abundant power. For heat-sensitive and power-hungry operations like Proof-of-Work mining, this is probably as good as it gets. Naturally, Russia’s largest cryptocurrency mining operations eventually settled around these places. We reached out to the teams behind two partner projects operating the rigs and facilities in the Bratsk data center to learn a bit more about their story.

Back in 2017, the En+ Group, the owner of the Bratsk HPP, sold a lot in Bratsk with 100 MW of available capacity to a company called BitRiver operating the data center in question. The company was looking for a suitable place to build an industrial-scale mining facility and needed at least 50 MW capacity.

Mining rigs installed in the Bratsk data center. Source: BitRiver

They got double that in Bratsk. Now the data center hosts over 25,000 devices, mostly ASICs mining cryptocurrency, in an industrial building close to the Bratsk aluminum plant.

“Currently, almost 100% of our clients’ rigs are running cryptocurrency-related computations. This is the most demanded type of energy-intensive computation. Eventually, we also expect the shares of machine learning computations and large dataset processing to grow,” says BitRiver CCO Dmitrii Ushakov.

The actual site is indeed industrial-scale. Individual devices are stacked three-story high and walking all the way along the racks can count as a short hike. Large fans run cold outdoors air through the building to vent out vast amounts of heat generated by the rigs.

Equipment racks at the site. Source: BitRiver

Engineers are monitoring the equipment around the clock and if something goes wrong, there’s a repair workshop on site. In case something goes very wrong, the site is constantly guarded by armed security personnel.

BitRiver engineer reads the temperature around the equipment racks. Source: BitRiver

Aside from the sales office in Moscow and a back office in Yekaterinburg, the team is predominantly located in Bratsk. According to BitRiver’s Dmitrii Ushakov, the project takes part in the development of the city and has a cooperation agreement with the local authorities.

“We offer internships for the students studying technical disciplines at the Bratsk state university, sponsor local events, even helped build a vet clinic. Of course, we also create IT jobs and pay our taxes there,” says Dmitrii.

The most notable partner and the largest client of the datacenter is BitCluster, a company providing mining-oriented services like equipment hosting and consulting. The company operates around 14,000 devices in the Bratsk data center. During the crypto-winter of 2017–2018, when mining profits were dwindling, the company and many other businesses in the industry had to move to a better location to cut costs.

“Back then, the profitability was nearing zero. We had to move our mining capacity to a place with cheaper electricity and chose Irkutsk Oblast, which had a surplus of hydroelectric power. Now we have two working sites there: the main site at BitRiver’s facility in Bratsk and another one in Angarsk,” says Sergey Arestov, co-founder of BitCluster.

Importantly, the beneficial conditions enjoyed by miners in Bratsk are not unique. Russia hardly has a shortage of notoriously cold places and Soviet-built concrete megaprojects still kicking. While there’s plenty of room and power for mining rigs, there’s no clear regulatory framework for crypto-mining and the country’s authorities don’t seem to have a consensus.

“Our country has everything for mining to thrive: a huge electricity surplus, vast landmasses, and a cold climate. The state sells electricity and gets taxes. Miners create jobs and pay the import taxes when buying new equipment. If the government prohibits mining, everybody loses,” Sergey explains, “Energy companies would lose part of their profits, the state budget would get less tax money, and private miners will obviously have to go.”

Right now, miners that work openly have to assume the risk that one day the government may decide that cryptocurrencies and mining aren’t allowed in Russia. This is a significant barrier for those who would like to enter the industry and use the country’s otherwise favorable conditions.

“The government has to introduce clear guidelines, licenses, and taxes for miners. We want to believe that the bill “On Digital Financial Assets” will be mining-friendly,” says Sergey Arestov.

The bill in question has been in development for about two years now. It is known that the legislation will include the definition of cryptocurrencies and will restrict their use for payments but mining is unlikely to be banned. According to the Chairman of the State Duma Committee on Financial Market Anatoly Aksakov, mining isn’t mentioned in the document at all and is of any interest to the government only for the sake of taxation. Yet, the new legislation has been delayed because of the pandemic.

Back in 1961, when the Soviet premier Khrushchev visited the construction site of the Bratsk HPP, the official propaganda depicted it as an “act of a great creation” that would usher in the “innumerable riches of the Eastern Siberia” for the benefit of “all the people.” Long gone are the Soviet premier, the person who wrote those pompous propagandist verses, and the Soviet Union itself. But these days, ironically, thanks to bitcoin mining, all those words seem to have gained another meaning.

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Tags: mining, regulation, Russia