Earlier this week, Bloomberg reported that a company co-owned by one of President Putin’s internet advisors, Dmitry Marichinev, has plans to raise up to $100 million in cryptocurrency to fund a Russian effort to challenge China in bitcoin mining.
The company, Russian Miner Company, is raising funds through an initial coin offering, or an ICO. An ICO is an increasingly popular way for cryptocurrency ventures to raise capital, similar to an IPO for public companies. In an ICO, a startup offers ‘coins’ representing a share of the company’s prospective revenue, in exchange for either legal tender or cryptocurrency to fund the startup in its early days.
In this case, those coins will be Russian Miner Company tokens, or RMC tokens, which entitle their holders to 18% of the revenue generated by the company’s mining equipment. RMC is accepting both Bitcoin and Ethereum as payment in exchange for the tokens.
(See also: Bitcoin Could Reach $50,000: Wall Street Analyst)
Stage 1 of the ICO started earlier this week, and will continue until August 25th. The second stage sale will be from August 28th to September 2nd.
The project was announced earlier this week by Putin’s internet ombudsman Dmitry Marichinev. It’s a joint venture, between the Russian political partner, the Party for Growth and the developers of the Waves blockchain. Briefly, bitcoin mining is the equivalent of computational manual labor. It’s work that must be done in order to verify the blockchain ledger. If you add transactions to the blockchain ledger, you are rewarded with 12.5 Bitcoin, roughly $42,500.
It’s an incredibly energy intensive process, requiring special computers with specific chips. It’s important to note, too, that Russian Mining Company is not simply a mining collective. They have ambitions to enter the cryptocurrency mining arena in a much more significant way: they want to produce mining equipment, too. In the press release, Marichinev said that up to $10 million from the ICO would be directed to develop and produce more efficient processors.
That, along with Russia’s 20 gigawatt excess of power capacity, and really cheap electricity, led Marichinev to an ambitious claim: “Russia has the potential to reach up to 30 percent share in global cryptocurrency mining in the future.”
Apparently, according to Coindesk, Party for Growth chairman and Russian billionaire, Boris Titov, said in a blog post on Thursday, that RMC has ambitions beyond bitcoin mining. Apparently, Russian Miner Coin and the blockchain platform developed by Waves could act as a pre-ICO verification platform, to ensure that ICOs are secure and safe for prospective investors to invest in.