UC Rusal will deal with crypto-currencies

Aluminum holding will create a data processing center in the territory of the Nadvoitsky plant.
Aluminum holding Oleg Deripaska UC Rusal creates infrastructure for a data center (data center) in the Nadvoitsky aluminum plant (Karelia), the company said. UC Rusal has started to design a data center that will provide high-tech IT services for analysis of large data, machine training and crypto-currency mining, the company's message says. The first partner of UC Rusal was AA! LAB, established in Bulgaria by the Russian programmer Alexei Zenkov. The companies signed a memorandum on cooperation in the field of digital technologies, said in a press release of UC Rusal. By the third quarter of 2018, companies will launch the first turn of the data center from 5000 computing units, servers and workstations. The electrical power consumption of the equipment will be about 6 MW, the press release said. Investments in the project the company does not disclose.

To try to reduce the cost of aluminum production at the Nadvoitsky plant due to a fall in metal prices, in 2014 UC Rusal bought from Ongodskaya HPP from Gazprom energoholding. The capacity of the station is 80 MW. But the smelting of primary aluminum here has not been renewed, now the plant produces only alloys. With this in mind, now the capacity of the Onda HPP is loaded by no more than 60%, the analyst of ACRA Maxim Khudalov counts.
Development of the territories of presence is a priority for the company, the representative of UC Rusal said: "The project of creating a high-tech center is primarily aimed at revealing the industrial potential of the Nadvoitsa site, the location, human and infrastructural capabilities of which allow us to consider development projects and partnerships with various high-tech companies." Zenkov confirmed that cooperation on the territory of the Nadvoitsky plant has already begun. He noted that this would allow the effective use of free energy facilities and create high-tech jobs. "Cooperation with UC Rusal is one of the pledges of future success in the implementation of the international project Mining Now, which AA! LAB implements using its own equipment and software," Zenkov added.

UC Rusal is not the only company in Deripaska that provides infrastructure for creating datac centers. In May 2017, En +, Deripaska's energy metallurgical company (controlled by UC Rusal), built the first data center module in Irkutsk, the "Cloud of Siberia", focused on providing services to customers from China. "The total cost of the project in 8000 racks of En + equipment is estimated at $ 300 million, so we can assume that the 5000-unit project, announced by UC Rusal, will cost about $ 150 million," the senior analyst at Gazprombank's strategic development and economic forecasting department Eugene Grankin. This is about 26% of the capital expenditures of UC Rusal for 2016 ($ 575 million), it follows from its report.

The efficiency of the data center will be provided by the available renewable energy of the Onda HPP and the cold climate of the region, which will allow reducing the energy consumption of the equipment cooling systems, UC Rusal said. Grankin agrees with the company. He sees the main synergy of the project in the access to cheap electricity for some, the ability to realize its surpluses for others and save on cooling systems. "At the same time, if you use such a data center primarily for crypto-currency mining, the main risk is the high volatility of the Crypto-currency rates (see graph). This makes the return on investment in the creation of such a complex very unpredictable, "the expert warns. The payback period of equipment in home mining is about 9-12 months, says Grankin. At the same time, such equipment quickly becomes obsolete, and given the high volatility of the crypto currency, such investments are very risky, he explains. "Industrial mining is more profitable because of cheaper electricity. In addition, large companies that are engaged in this, develop their own equipment for mining. This reduces costs, "- adds the expert.

The expected capital expenditures of UC Rusal in 2017 are $ 600-700 million, recalls Nikolai Sosnovsky, director for metallurgy and mining at Prosperity Capital Management. If the data center really costs about $ 150 million, it will require an increase in the company's capital expenditure by a quarter, he believes. "Such an investment, especially in a non-core project, looks rather risky, given that recently the financial results of the company were weak, and most of the debt is still on the balance sheet," Sosnowski is sure. Net debt of the company by the end of 2016 - $ 8.4 billion, follows from the presentation.