March 22

Russia encounters mining hotel boom

March 22

According to Youla, a bulletin  board service, the number advertisements for mining hotels has grown sixfold within the first quarter of 2018.

Popularity of mining hotels is enjoying phenomenal growth, reports «CommersantЪ», basing its conclusions on the statistics of Youla’s data.

Within the first quarter 2018 there has been a sixfold increase in the number of mining hotel advertisements. Within the first half of March number of  search requests for «mining hotel» increased 9,5 times, for «hotel for mining» - 4 times, for «data center for mining» - 3,5 times. Most widely the supply is presented in Moscow and St.-Petersbourg. Then by a large margin come Chelyabinsk and Nizhniy Novgorod. The least advertisements are from Ufa, Tyumen, Samara, Rostov-na-Donu, Orsk, Novosibirsk, Kirov, Irkutsk and Ivanovo.

At the same time the supply increase lead to a service price reduction. In January accomodation in a mining hotel averagely cost 3750 roubles a month, in February the average price was already 3140 roubles and in March it reduced to 2550 roubles a month. The cheapest supply was from hotels in Ivanovo and Ufa. They priced their services at 1000 and 1500 roubles respectively. The most expensive ones were from Chelyabinsk (4500 roubles) and Tyumen (5000 roubles).

According to Aurora Blockchain Capital’s head of research Georgi Erdman, rent of mining hotels’ units is beneficial to clients who have small cheap farms.

He says:

«The average cost of a farm makes 170-190 thousand roubles. At the current price of Bitcoin it pays off in 9-11 months. The cost of the hotel rent could be considered insignificant».

Enigma company director and co-fоunder of ICG cryptocurrency fund Igor Zartdinov also states the high demand of mining-hotel services. Keeping a mining-farm in a block of flats is difficult due to high energy consumption, heat and noise issues. Other premises such as garages and cargo containers would need expensive equipment. Requirements for mining hotels at the same time are rather high.

«The premises should have sufficient ventilation to avoid equipment heating. It should be dry enough and have a stable electrical grid, also it should be fire-safe», — explains Zartdinov.

Professional miners, he adds prefer to accommodate their farms in class A hotels (rooms no less than 100 sq.m., with a secondary power circuit, a «cold corridor», an emergency fire suppression system, security and 24/7 service). Most of such hotels are located on the premises of electric power plants, thus having a discount on the energy cost. Setup of such an hotel would cost $1-1,5 million.

«The average price for this level of service including the energy cost would make 7-8 thousand roubles per unit», — notes Enigma’s director.

From his knowledge half a year ago a unit in a class A mining hotel cost up to 15 thousand. Now the initial costs of the hotel owner pay off within a year. And this creates high competition.

«At the same time areas suitable for mining hotels are reducing rapidly», — indicates the co-fоunder of ICG cryptocurrency fund.

In his opinion in the future this should consolidate the market and even develop mining hotel services.

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