Russia Unveils Equity Fund for Financing Crypto Mining

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

The new mutual investment fund will be available to qualified investors who can invest a minimum of 300,000 rubles (about $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 collect about 500 million rubles, the report said.

The Kommersant report emphasized that the potentially high return on investment in the cryptomining sector is accompanied by high risk. It also said there is a lack of regulation in the space and that the Russian central bank is seen as generally hostile to 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 that the fund can be approved, and that the central bank has “relaxed its stance” on crypto mining, the report says.

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

Mining is becoming more popular in Russia

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

He explained that his firm is in the final stages of negotiations for major investment deals in several “industrial” scale crypto mining projects 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, given its cool climate and abundant low-cost energy. In addition, some have suggested that Russia should embrace crypto as Western sanctions bite the country’s traditional industries.

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