Russia Unveils Mutual Fund for Financing Crypto Mining Operations

Mining Russia

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June 26, 2023 06:55 EDT

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A Russian company has unveiled a new fund intended to finance crypto mining operations in the country.

The new mutual investment fund will be available to qualified investors who can invest a minimum of 300,000 rubles (approx. $4,000), and the money will be used to acquire crypto mining equipment and pay for electricity and other operating costs, Russian business outlet Kommersant has reported.

The fund hopes to raise some 500 million rubles, the report said.

The Kommersant report stressed that the potentially high return on investments in the crypto mining sector is accompanied by high risk. It also said there is a lack of regulation of the space and that the Russian central bank is seen as generally hostile towards crypto.

As recently as this week, Russia’s central bank warned that legalizing crypto could undermine the country’s financial system.

According to Kommersant, the launch of the fund is still subject to regulatory approval in Russia. However, industry observers believe there is a good chance the fund can be approved and that the central bank has “eased its attitude” towards crypto mining, the report said.

The Russian central bank has previously banned the inclusion of digital assets in mutual funds, but some mutual funds that invest in companies working on blockchain technology have been approved.

Mining becoming more popular in Russia

Alexander Baryshnikov, head of development at Russian mining firm BitRiver, told Kommersant there has been an “explosive increase in interest” in crypto mining in Russia, including from major banks and investment companies.

He explained that his firm is in the final stages of negotiations for major investment deals in several crypto-mining projects at an “industrial” scale in the energy-rich country.

The increase in interest in crypto mining in Russia is believed to have come from a narrowing of other investment opportunities in the country.

Russia has also been pointed to as a natural location for crypto mining operations, given its cool climate and abundant, low-cost energy. Additionally, some have suggested Russia should embrace crypto as Western sanctions bite the country’s traditional industry.

In December last year, it was reported that Russia was on the verge of legitimizing the crypto-mining industry by officially legalizing mining. However, in January this year, the Russian Finance Ministry said that the progress on the proposed mining bill had “stalled.”