Crypto-courting in Kaliningrad

There's evidence of the Alphaville team in several places today -- not just here on the blog, but also in the Palace of Westminster where Izabella Kaminska will give evidence on digital currencies to the Treasury Select Committee (we'll be live-blogging). Over at the FT Magazine, meanwhile, you can read a piece from Kaliningrad on how the Russian exclave encourages crypto miners to set up shop there. (Yes, it's an exclave not an enclave. More on that at a later date.)

We even managed to film some stuff while we were in Kaliningrad, including a human bitcoin miner blowing dust out of non-human ASICs miners in a derelict former Soviet factory. Cryptolyfe is as glamorous as it is high-tech:

The gist is that this region, surrounded by the EU and Nato while a member of neither, and separated from Mother Russia by two other countries and about 300 miles, has had to be a bit creative when it comes to encouraging business.

With Russia on less than friendly terms with Kaliningrad's neighbouring Lithuania and Poland, the vast majority of the exclave's exports go to the mainland. But shipping goods across three borders is costly, difficult, and slow, so the federal government is offering tech entrepreneurs generous tax incentives, part of the privileges Kaliningrad gets as a special economic zone. Exporting virtual stuff is much easier than the physical variety.

The mayor of one Kaliningrad town is even trying to set up a “Silicon Valley on the Baltic”. We look forward to seeing how that one turns out.

While crypto regulation is still pretty unclear in Russia -- not to say downright confusing -- the region has decided that crypto miners aren't doing anything too shady:

Whatever is not illegal is legal.

That was how Sergei Evstigneev, the region’s IT and communications minister, described the situation when we met him in the offices of the state-owned Kaliningrad Region Development Corporation.

(Apparently we were “under a positive impression” of what we saw in Kaliningrad, according to the KRDC, who put out a press press release about our visit describing how we were one of a number of news outlets from “Foggy Albion”, who had come to visit the region ahead of the England v Belgium game to be held there next Thursday.)

Mr Evstigneev and the KRDC's director-general Vladimir Zarudny, who we spoke to separately, both told us they had no concerns about the environmental impact of crypto miners in the region. Kaliningrad is in the process of building several more power plants, one of them coal-powered, which it reckons should attract more crypto miners.

We're not judging. As we Foggy Albionians know all too well, given our own impending separation from the rest of the European Union, sometimes, desperate times call for desperate measures. In totally unrelated news, the Right Honorable Grant Shapps MP was to be found in London on Tuesday delivering a speech called “Building a Blockchain Britain”.

The run-up to our visit was filled with apprehension and stress, for several reasons: the only novels we had found based in Kaliningrad all involve murder; we were told it was bleak and we'd need a holiday to recover from a visit; the visa/accreditation process for journalists is painful; and the local mayor had been forced to warn locals not to beat up foreigners.

But it was actually fascinating, and we'd recommend a visit. If you've used up all your leave, though, and you're not one of the England fans travelling there next week, fear not. This will be the first in a series of posts on the region, which we will call “Of Kant, crypto, and contradiction”. We hope you enjoy it.