July 2024: Key Legal and Corporate Developments Reshape the Crypto Mining Industry

From Russia's implementation of stringent regulations to key investments in mining infrastructure, these series of events showcase the sector's swift evolution.

Significant developments occurred in the crypto mining industry during July 2024. These included new legal frameworks, substantial investments, and strategic acquisitions, highlighting the rapid evolution of the sector. Here's a summary of the key events:

1. Crypto Mining Gets Legal Framework in Russia:

The State Duma of the Russian Federation passed a bill to regulate crypto mining and digital asset circulation in late July. The legislation aims to legalize large-scale mining operations by requiring them to be included in the mining infrastructure operators’ registry.

Home miners can continue their activities without registration, provided they adhere to government-set energy consumption limits. However, individuals with criminal records related to economic crimes are excluded from participating in crypto mining activities. This measure is intended to ensure that only compliant and trustworthy entities operate within Russia’s growing crypto mining industry.

President Vladimir Putin further solidified these regulations by signing the bill into law on August 8. This move introduces official terminology, such as "digital currency mining" and "mining infrastructure operator," into the legal lexicon. The legal framework also clarifies the operational settings, recognizing mining as part of the turnover process, which may influence future regulatory and taxation policies.

2. Australian Bitcoin Miner Iris Energy Boosts Capacity with New Funds:

Bitcoin miner Iris Energy, based in New South Wales, Australia, raised $413 million in July. The company's goal is to use these funds to boost its operational capacity, adding 30 EH/s and 510 megawatts (MW) of data centers to fully support its 2024 expansion plans.

This financial maneuver also strengthens Iris Energy's position and provides flexibility for future procurement, additional power capacity, and strategic monetization opportunities. Notably, the company is focusing on its 1,400 megawatt (MW) project in West Texas, among other endeavors in the United States.

3. Riot Platforms Expands with $92.5 Million Block Mining Acquisition:

Riot Platforms also made headlines in July with its acquisition of Block Mining, a Bitcoin miner based in Kentucky, for $92.5 million. This acquisition is part of Riot's strategy to diversify and expand its operations across the United States.

The deal, which was funded through a mix of cash and stock, will add 60 MW of developed capacity to Riot's operations, with the potential to scale to over 300 MW. According to Riot CEO Jason Les, this acquisition is crucial for achieving their growth target of 100 EH/s and expanding into new power markets.

"The acquisition of Block Mining also diversifies Riot geographically into new power markets and brings onboard a proven operating team,” Les added.

4. Northern Data Eyes U.S. IPO for AI and Data Center Units:

European Bitcoin miner Northern Data is reportedly exploring an initial public offering (IPO) for its AI cloud computing and data center businesses in the US. The potential IPO, targeted for the first half of next year, could value the combined businesses between $10 billion and $16 billion.

The Frankfurt-based company is considering listing its cloud computing activities, Taiga, and its data centers, Ardent, on the Nasdaq. This move could boost Northern Data's market presence and supply the capital needed for its US expansion. Additionally, the firm's decision to pursue a US IPO reflects its strategy to capitalize on the growing intersection of AI, cloud computing, and crypto mining.

This news also positively impacted Northern Data's stock price. According to available data, on July 2, NB2 jumped from €25 to as high as €32.85. However, during the market after-hours on August 9, its price had slid to €20.60.

5. Former Executive Wins $138 Million Verdict Against Marathon Digital:

Marathon Digital was penalized $138 million in late July following a jury's decision that the company had violated a non-disclosure agreement with its former executive, now serving as Chief Strategy Officer at Hut 8.

David W. Affeld and Edward E. Johnson, from Affeld England & Johnson LLP, represented Michael Ho in a trial against Marathon's counsel at Weil Gotchal and Manges LLP. According to Affeld, the unanimous jury verdict of $138 million vindicates Michael Ho's efforts and expertise. Furthermore, it reinforces the importance of honoring contractual obligations and respecting professional relationships.

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