BitRiver, a key player in the Russian cryptocurrency mining market, aims to raise up to $35 million by selling tokens that entitles holders to space in its data centers.
The company, which operates several mining farms in Siberia for 150 megawatts in total, would use the proceeds from the sale to open more such facilities. The token runs on the Ethereum blockchain, the main launchpad for fundraising tokens since the heady days of the 2017 initial coin offering (ICO) boom.
While ICOs have largely faded, BitRiver’s token offering, announced Monday, is one of several to hit the market this year tied to the mining sector.
In late March, Blockstream launched a token representing the value of hash power at Blockstream’s mining facility and offered buyers an indirect exposure to bitcoin. Tau Protocol recently launched a token pegged to bitcoin hashrate and backed by Genesis Mining, Binance Pool, Atlas Mining and others.
BitRiver, however, takes a different approach. Instead of indirect exposure to bitcoin, it offers clients a form of tokenized contracts for mining services, with a bonus income in tokens.
“It’s a utility token and it ideally fits our goal: to raise funds from people who will be using our future infrastructure,” BitRiver CEO Igor Runets told CoinDesk.
More farms in Siberia
BitRiver, registered in Gibraltar but with a home base in Siberia, operates so-called mining hotels, or data centers for miners who place their ASICs there. Clients pay for the units of power their equipment uses to mine crypto, with the price including other expenses like machine maintenance.
The demand for BitRiver’s services has been significantly exceeding the company’s capacity, Runets said. In addition to the main data center in Bratsk, the company has several smaller venues that together comprise 50 more megawatts, but that’s still much less than prospective clients want, Runets said.
“We now see demand for 400 megawatts of power,” he said. “It’s a huge amount of construction work. We’re now looking to buy more land, buildings [and] start to build more data centers.”
Investments for that, as Runets expects, will come from the token sale. BitRiver is aiming to sell 100 million tokens for more than $35 million.
The demand for BitRiver’s services comes mostly from Asia, Runets said, especially from China, South Korea and Japan. BitRiver even opened an office in Seoul earlier in April to cater to that region, and the token sale will be on the Korean exchange Bithumb.
Growing demand has been also coming from Persian Gulf countries, namely Qatar, Saudi Arabia and UAE, Runets said: “Over the recent months, the market there has been growing, people have a lot of money to invest, and the surging price of bitcoin drew attention [to mining].”
Some of the expansion has been ongoing. BitRiver recently founded a joint venture with a Russian hydropower giant En+ to build a new mining venue of 10 megawatts. According to Runets, that farm is now operational.
Another venue, of 100 more megawatts, is currently under construction in the special economic zone of Buryatia, Russia’s East Siberian region on the border with Mongolia. In the neighboring Krasnoyarsk region, BitRiver will arrange another venue using the building of an electric boiler now rarely in use, with a ready-to-use capacity of about 82 megawatt, the token sale white paper said (read the white paper at the bottom of this story).
The BTR token sale is set to go live on April 19 on Bithumb. BitRiver is planning to sell 100 million tokens with a price starting at 35 cents. Each token would provide a buyer with an allocation of 1 watt of power for a full year. Given that there is on average 720 hours in a month and 8,640 hours in a year, one kilowatt-hour would cost 4 cents to a token holder.
Token holders will be able to get their ASICs installed and serviced in BitRiver’s warehouse in three months upon purchase. Users will also be able to pay up to 10% of their bills to BitRiver in tokens, and have their ASICs repaired for free in that case.
The company will also pay bonus tokens to the token holders, at a rate of 10% per year, using its own stash of 65 million tokens that won’t go into public circulation. In another step to make BTR attractive, BitRiver promises to buy back all the tokens by April 12, 2026, at the nominal value of 0.3504 USD per token.
BitRiver is not limiting the offer geographically, unlike many token issuers that would wall off American users to avoid running afoul of the U.S. regulators such as the Securities and Exchange Commission (SEC). Blockstream, for example, restricted its token sale to non-U.S. qualified investors.
Runets explained that, as BitRiver isn’t selling the tokens directly, it’s up to Bithumb to run due-diligence on potential buyers.
Crypto regulations in Russia have been in flux recently, with a crypto taxation bill currently awaiting passage in the national parliament. The uncertainty led many of BitRiver’s clients in Russia to establish foreign legal entities and operate through them, Runets said.
However, when asked about potential regulatory risks for a large-scale mining farm construction, he sounded moderately optimistic: “We don’t see any prerequisites for an all-out ban,” he said.