A Russian aluminum plant is pivoting to bitcoin mining after U.S. sanctions forced the plant to shut down in 2018. Russian aluminum giant Rusal is leasing its Nadvoitsy Aluminum Plant, located in the northwest region of Karelia, to a crypto startup called the Russian Mining Corporation (RMC), according to Russian news site RBC.
The U.S. Office of Foreign Assets Control (OFAC) hit Rusal with sanctions in April 2018. At the time, the U.S. Treasury Department dubbed Rusal majority shareowner Oleg Deripaska a “Designated Russian Oligarch,” thereby sanctioning the firm.
RMC is renting out a small part of the plant and plans to use the plant’s cheap power and expansive footprint to install miners in order to take over a large portion of the global bitcoin mining market. In cooperation with U.K.-based exchange and wallet provider Cryptonex, founder Dmitry Marinichev said the company plans to capture 20 percent of the current bitcoin mining market. RBC reports Russia currently holds about 10 percent of the world’s bitcoin mining capacity.
“Now the Rusal plant is unprofitable, the electricity supplied to it is practically not being utilized, and people living in the single-industry town near the plant have nowhere to work,” Marinichev told RBC, “Our idea is to redesign the plant and sell its computing power as a service, that is, provide an IT service.”
Under the agreement, Cryptonex transferred 42 million of its exchanges native token CNX to the mining firm, worth an estimated $85 million at press time according to CoinMarketCap. The firms also came will also fund the purchase of mining equipment for the new facility, Crytponex said in a release.
Bitcoin miners image via CoinDesk archives