Behind the mysterious ICO that Mycelium has been promoting, Russian Miner Coin [RMC]

About a week ago, the popular mobile Bitcoin wallet, Mycelium, added a button allowing users to “Buy RMC”, with little explanation. Users were left confused as to what this coin was. Little information could be found on the ICO, aside from an article in Bloomberg and brief mentions on Bitcoin.com.

So after some research, here is my summary.

Russia’s first big bitcoin mining ICO

According to the Bloomberg article, and interviews, the ICO plans to raise 100 million USD in cryptocurrency to expand Bitcoin mining operations in Russia.

The goal is to use about 90 M towards manufacturing of a new 18 TH/s Bitcoin miner, the Sunrise S11i; which according to the company, is going to be produced as early as September for the first batch; before ramping up development to 110,000 over the period of a year.

Founder Dmitry Marinchev, hopes the project will help rocket the Bitcoin mining share of Russia from under 3% to around 30%. Currently Chinese miners dominate the space; almost 60% by some estimates.

In a youtube video posted to the company’s channel, a news segment from “Russia 24" interviews Marinchev in the current company HQ, an old automobile factory now converted to a Bitcoin mining warehouse.

Big players, big hopes

It seems like the legality of ICOs in Russia may be determined soon. There are preparations for legislation to come before the state duma to resolve the status of ICOs. The head of the government’s working group Elina Siderenko; has been fairly bullish on cryptocurrencies, and appears to think RMC is “[the] First ICO with legal expertise to be held in Russia”.

It’s worth noting that Marinchev is an internet ombudsman and adviser to the Russian president. He’s not the only one, businessman and presidential adviser on Entrepreneurs rights Boris Titov; appears to also be involved. Along with Waves co-founder Sasha Ivanov, Titov appears to be working on a Russian based ICO incubator/pre-verification platform; and RMC could have been its first project.

Starting over

Interestingly enough, aside from a few government-associated crypto-evangelists, the project also includes someone who ended up losing everything in large part due to the Russia’s underdeveloped business laws.

More than a decade ago Sergei Bobylev founded one of Russia’s largest computer retailers “Sunrise”. At it’s peak grossing over $800 million annually, a merger with an ill-fated partner destroyed the once successful chain. To sum the story up, creditors called loans on the partner firm and subsequently Sunrise; an unexpected landslide that left the company insolvent. A situation usually resolved by civil courts in western countries; in Russia’s quasi-democracy; Bobylev became the target of criminal courts instead, and ended up spending over 5 and half years in prison.

Bobylev details how he lost everything in a Forbes piece.

Eventually, Bobylev was released early, in large thanks to aforementioned Putin advisor Boris Titov. When Russia’s top entrepreneurial rights commissioner advocates on your behalf; it could be an indication that mistakes were made, which probably means to little to a man who already lost his entire business empire.

Regardless, Bobylev was free and still eager to pursue ventures in Russia. He founded Smart Heat (now part of RMC), a company that manufacturers Bitcoin miners. Bobylev is now working in the R&D team of RMC, alongside several highly connected and influential individuals; it’s quite a turnaround. My own speculation is that the “Sunrise S11i” name is perhaps a homage to Bobylev’s lost empire.

Cheaper Electricity, Lower Costs

As reported in several outlets, there are ongoing talks to sell surplus power to Bitcoin miners; at a discounted rate. Electricity accounts for about 30% of mining costs in some instances and cheap power may give Russian miners an edge.

It’s not clear the exact rate that miners will pay, but one of the largest mining operations in Russia currently pays around 4–9 cents/kwh; this is presumably before any negotiated rate. Electricity costs vary by country, about 12 cents/kwh on average in the USA and about 35 cents/kwh in Germany.

The next generation miner

While the company is staking most of its ICO funds towards the production of Bitcoin miners, it’s hoping to use develop an experimental technology to breakthrough in the mining of other cryptocurrencies, namely Ethereum.

Bitcoin mining has taken several technological steps forward in a few years; in the very early days of Bitcoin it could be mined on a regular computer CPU. Soon it became more efficient to mine using GPU’s and shortly thereafter, specialized hardware (ASICs) took over the market as the only profitable way to mine.

RMC hopes that the development of Multiclet, a new type of microprocessor can leap ahead of current technology available for mining cryptocurrencies.

Not much is known about Multiclet or its tested mining results. The minds behind behind Multiclet,Nikolai Streltsov and Boris Zyrianov are now part of the RMC R&D team, hoping to tailor their microprocessor technology to cryptocurrency mining.

Zyrianov and Streltsov have already drawn attention from the government for their work on the high-tech processor, earning medals from the Academy of Engineering Sciences in 2012.

According to the company, a working 180nm version of multiclet is already developed and now the company hopes to use the next 12 or so months to develop and manufacture a 28nm version. If successful, the new processors would not only be much more powerful, but also energy efficient compared to market alternatives.

Reducing the risk

It does appear that RMC realizes that Multiclet is a big risk. The company hopes to hedge investors risk by offering token holders a stake in their mining profits and a chance to buy Sunrise S11i miners at a discount.

The company claims to have hardware locked about 20% of each Sunrise S11i’s computing power so that nearly all of it is distributed to the joint mining club (RMC token holders). 18TH/s are received by the physical owner of the mining unit and 4.6TH/s are sent to the club. While unclear how unlock-proof this hardware is; it’s likely that most of the 110,000 planned units will be delivered to one of RMC’s mining facilities (1 current, 2 planned) anyway.

Sunrise S11i Miner

The rest of the units are set to be sold on the open market; with a discount available to RMC token holders, plus the option to either take physical delivery from a dealer or place the miner in one of RMC’s maintained data centers (for about 1000 Rubles/18 USD a month plus the cost of power).

RMC has already signed agreements with Russian distribution company OLDI to train, service and sell the Sunrise miners to dealers; hoping to boost local sales and subsequently provide a better return to token holders. It’s unclear when overseas dealers will appear, although with 18TH/s at a $1600 price point (for token holders); will hopefully come soon.

ICO details and points

  • RMC is a colored coin, it can be purchased through Mycelium (Android)
  • Sunrise S11i miners are already in production, the first delivery to be made later this month (Sep. 2017)
  • The production rate of S11i’s is about 500 a week, 110,000 units are planned
  • 1 RMC can be redeemed for 1 Multiclet miner when it is produced
  • Token holders will share the BTC mining income from the joint mining pool while Multiclet is being developed
  • You may choose not to redeem 1 RMC for a Multiclet Miner and instead stay in the joint mining pool
  • A 180nm version of the Multiclet processor is finished, a newer 28nm version, specifically for mining is the project focus/final product to be delivered.
  • Minimum RMC purchase is 0.1
  • The price of 1 full RMC ranges between 4000 and 4900 USD depending on the purchase date
  • The price of RMC rises 25 USD a day until the ICO closes on the 28th of Sep.
  • You can purchase using BTC or ETH
  • Currently about 37–41 M USD in cryptocurrency has been raised
  • Token holders will have special pricing ($1600) for the Sunrise S11i; the hardware also boasts a 3 year guarantee
  • RMC who don’t want to wait for Multiclet can also redeem RMC for a Sunrise miner (Value of RMC Token divided by $1600)
  • The S11i miner price includes the power supply

Company website: https://rmc.one/

Whitepaper: https://rmc.one/static/pdf/whitepaper_EN.pdf

Why Mycelium?

RMC opted to use colored bitcoins and integrated into Mycelium for security reasons. Instead of using smart contracts where hackers may potentially exploit flaws (the biggest example being the DAO), RMC wanted to list on Mycelium because of it’s long standing and trusted reputation as a secure wallet.

It’s looks like RMC is possibly one of the first colored bitcoins going to be available through Mycelium, where users can display their digit assets on the wallet.

Disclaimer: Please be aware of your countries laws regarding ICOs. There is a lot of risk when investing in startups, especially ICOs; this article does not constitute or aim to give investment advice. Please be aware that I, as an author have a personal bias and may be partial to certain projects. Always do your own research.