Russia buying into cryptocurrencies

Mr Dmitry Marinichev is one of Russia's leading crypto- businessmen. His virtual currency mining farm operates in a former Soviet-era car factory warehouse in Moscow (right). Mining farms like this represent a growing craze in Russia for bitcoin and
Mr Dmitry Marinichev is one of Russia's leading crypto-businessmen. His virtual currency mining farm operates in a former Soviet-era car factory warehouse in Moscow. Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies.PHOTO: AGENCE FRANCE-PRESSE
Mr Dmitry Marinichev is one of Russia's leading crypto- businessmen. His virtual currency mining farm operates in a former Soviet-era car factory warehouse in Moscow (right). Mining farms like this represent a growing craze in Russia for bitcoin and
Mr Dmitry Marinichev is one of Russia's leading crypto-businessmen. His virtual currency mining farm operates in a former Soviet-era car factory warehouse in Moscow (above). Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies.PHOTO: AGENCE FRANCE-PRESSE

MOSCOW • Standing in a warehouse in the Russian capital, Mr Dmitry Marinichev tries to speak over the deafening hum of computers hard at work mining for crypto money.

"The form of currency we are used to is about to disappear," said the 42-year-old entrepreneur, who also works as President Vladimir Putin's adviser on Internet matters.

Mr Marinichev is one of Russia's leading crypto-businessmen at the helm of operations in this facility, which collects virtual money on the accounts of its clients. Individuals, or firms like Mr Marinichev's, provide the computing power to run the so-called blockchain which records the world's virtual money transactions. In return for providing that service, they receive virtual money, of which bitcoin is the most popular, as payment - a process bitcoiners call "mining".

Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies not backed by governments or central banks that are increasingly used for goods and services on the Internet.

The hunt for virtual currencies is accessible "to anyone who may be hardly familiar with computer science", Mr Marinichev said. "It's no more complicated than buying a cellphone and connecting to a mobile network."

The practice has become so popular in Russia that computer stores in the country have run out of graphic and video cards developed for gamers but are used by bitcoin miners to boost the processing power of their home computers.

Mr Marinichev this week unveiled a more sophisticated set-up, inviting investors to pitch in US$100 million (S$137 million) to join a mining club and develop a Russian mining chip called Multiclet through his start-up.

Since the beginning of the year, bitcoin has quadrupled in value, surpassing US$4,000 at the weekend, while ethereum experienced a rise of 4,500 per cent to hit a record of US$374 in June, later falling to US$268 this month.

The authorities in Russia were long suspicious of virtual money but have come to recognise it as a force. A new Bill is set to be debated this autumn which aims to regulate the possession and creation of cryptocurrency in the country.

The legal foundation for virtual money has so far been non-existent in Russia and it is associated with illicit activities like hacking and used to purchase drugs on the dark Web.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on August 17, 2017, with the headline 'Russia buying into cryptocurrencies'. Print Edition | Subscribe