With 20 megawatts of spare power and a desire to de-dollarize its economy, Russia is moving to take a slice of the Bitcoin mining market with Russian Miner Coin (RMC).
I’ve been chronicling for the past two months the story of how Russian President Vladimir Putin has embraced blockchain technology. Just the other day I told you about the Bank of Russia and the Russian government developing Masterchain, an Ethereum-based system to streamline basic back-office banking and brokerage functions across Russia.
Now, we get the insane news that a Russian company, with strong ties to Putin himself, is developing a new cryptocurrency called Russian Miner Coin (RMC) which will be issued based on leveraging Russia’s immense spare electrical power, 20 Megawatts to be precise, and unheralded but substantial microchip industry to build a massive Bitcoin mining system.
RMC – Revenue Driven Investment
Holders of RMC’s will be paid 18% of revenue generated by the endeavor like a dividend. Except, I want you to note the difference. The payout is based on revenue, not bottom line profit.
Russian Miner Coin is holding a so-called initial coin offering, where investors will use units of ethereum or bitcoin to buy new RMC tokens. These new tokens will have rights to 18 percent of the revenue earned with the company’s mining equipment, according to a presentation posted on its website.
When I assess foreign stocks I ignore P/E because earnings are fungible thanks t ovagaries of accounting. On the other hand, Price-to-Sales, or P/S, is a better measure because sales are sales and are a lot harder to play games with.
So, here, RMC is saying directly, that this is not a company designed to make the officers rich at the expense of the shareholders (coinholders). No, this is a coin designed to be distributed far and wide and provide an income stream.
This is like an actor demanding points of the gross, not net, ticket sales for a movie. It’s an enormous difference.
More important is that this is a direct attack on the dollar reserve system. Putin told the U.S. that there would be consequences for the new sanctions bill.
I wracked my brain for a few days trying to come up with something targeted and deadly. Uranium export boycotts are too disruptive and only a last resort, like nuclear weapons themselves.
My initial thought on this is that it creates a major back-channel for foreign banks and companies to do business with Russia contravening the sanctions. The coin itself can be built on whatever blockchain technology they want, including ones that utilize Monero’s ring signature system to create completely anonymous transactions.
As I said in a quick post on Steemit this morning:
This is a huge move to counter U.S. sanctions as well. It creates a new token that can easily move cross-border to settle trade that the U.S. can’t track directly. If you here anything at all about ring-signatures and Monero-technology in the context of Russia, you know this is how they are planning to get around sanctions.
Build a new crypto. Incentivize its distribution to the Russian people and banks by making it an investible asset that pays an initial return and then create an another alternative payment system to get around U.S. money laundering rules for foreign banks scared to do business with Russia due to the sanctions.
Not only does Bitcoin get potentially elevated to the level of reserve asset to reside right next to Russia’s enormous pile of gold that represents nearly 20% of M2 in Rubles at insanely depressed prices, but it also furthers the argument for Russia to be a destination for capital as the sovereign debt crisis unfolds.
Capital is flowing into cryptos at an astounding pace. Governments are completely behind the curve in their adoption of this technology. Russia under Putin is moving quickly to remedy this and now fully groks how it can help him acheive his goals for Russia’s financial independence from the U.S.
Lastly, if this proves successful, Russia’s new Bitfury chips that will power this system could see wide demand in the global mining market.
Sanctions are never a solution to the problem they intend to solve. All they ever do it alter the flow of capital into endeavors to get around them. In this case, the opening up of the Russian microchip market into commercial applications that are not directly tied to its military and space programs.
You would do well to begin thinking about Russia as the U.S. post-WWII where it will be the recipient of an inflow of capital fleeing global chaos and the unleashing of massive economic forces within the country.
P.S. I would give my right arm for an English translation of the RMC presentation found here. It makes me sad that I didn’t continue with my learning Russian after briefly doing so in college.