The establishment of Russia’s first mutual investment fund dedicated to financing cryptocurrency mining operations is underway. According to a report by the Russian press, it will be available to qualified investors and will finance the acquisition of coin minting equipment.
Russian Crypto Mining Sector to Attract Shareholders Through Investment Fund
Work has begun to set up the first mutual fund for investments in crypto mining enterprises in Russia, the business daily Kommersant reported. It will operate as a venture fund for the purchase of mining hardware through a special entity which will then lease the equipment.
The new closed-end fund will be established by Finam Management, which will register it with the specialized depository in March, the article details. Only qualified investors will have access, with a minimum threshold of 300,000 rubles (almost $4,000).
The company intends to raise 500 million rubles (over $6.6 million) before incorporating the leasing firm, Finam CEO Vladislav Kochetkov explained. Part of the money will be used to buy mining machines and the rest will be spent to pay for electricity and maintain the fund.
The project is a unique offering for Russia, the publication noted. Management companies have previously created mutual funds focused only on businesses developing blockchain technology. In 2021, some tried to register funds for cryptocurrencies and their derivatives but the Bank of Russia banned the inclusion of foreign crypto assets in mutual funds.
Participants in the collective investment market believe, however, that after the past year of sanctions the monetary authority is likely to soften its stance at least on some crypto-related activities, such as mining, and approve the launch of the fund. Artem Mayorov, director of the asset management department at Ingosstrakh-Investments, told the newspaper that if that happens his management company will also launch one.
Bitriver, the leading Russian mining operator and provider of hardware hosting services, revealed that there has been a serious increase in interest from the largest Russian banks, investment companies, and management firms since the fourth quarter of 2022. Alexander Baryshnikov, its head of digital project development, elaborated:
We are in the final stages of negotiations on the organizing of a number of funds related to investments in industrial mining.
The growing attention to crypto mining has been attributed to the sharp narrowing of investment opportunities in the domestic financial market as well as the potentially high profitability of mining investments. Russia has certain advantages as a mining destination, including low-cost energy and a cool climate. A bill regulating the industry is under review in the lower house of Russian parliament.
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Lubomir Tassev
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
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The Russian government has recently announced plans to create an investment fund focused on cryptocurrency mining. The new fund, which was approved by the Russian State Duma, will be financed by private capital and will focus on acquiring, storing, and mining digital assets.
The announcement follows a new law that was passed in January, which recognizes cryptocurrency as property. The new law also allows for the creation of cryptocurrency exchanges and other services.
The new fund will provide investors with a way to participate in the cryptocurrency mining industry and benefit from the growth of digital assets. This is appealing to investors that may not have the ability to build their own mining rigs or set up a mining operation.
Cryptocurrency miners are rewarded with new coins when they contribute to maintaining and verifying the blockchain. As the price of digital assets fluctuates, miners can either benefit or lose money. Investing in a mining fund allows investors to diversify their portfolio across many different digital assets and spread their risk.
The newly-approved fund is not exclusively focused on Russia; however, it is expected to target Russian-language projects and local companies. The fund’s administrators are also reviewing projects from elsewhere as they seek to diversify their investments.
The new fund is part of Russia’s larger plan to become a major player in the cryptocurrency industry. The government has already announced plans to create a “cryptocurrency valley” in the Krasnodar region, where companies in the industry will have access to tax breaks.
It remains to be seen whether the fund will be successful. However, it is a positive sign that the Russian government is taking steps to legitimize and support the cryptocurrency sector. It will also be interesting to see how the fund affects the price of digital assets in the future.
