Summary
Over the past seven months, we have provided legal support for the launch of a mining infrastructure powered by electricity generated from excess gas. The project encompassed the full legal cycle — from assessing the feasibility of combining self-generation with mining to establishing a corporate structure and tax planning. The team was involved in all stages of the launch, with the firm’s managing partner serving as Chief Legal Officer for the project.
Challenges
The client was implementing a technologically innovative but highly regulated project: developing a model of self-generated electricity from a remote gas field to power data centers and cryptocurrency mining operations. Key legal challenges included:
- Assessing the applicability of regulation in the field of digital financial assets (DFA) and the legal status of mining;
- Analyzing the permissibility of combining power generation and mining within existing industry requirements;
- Determining the legal classification of the activity as an infrastructure operator;
- Structuring the tax regime: calculating and paying corporate income tax, accounting for expenses, assessing the validity of VAT deductions;
- Segregating types of activity for taxation purposes;
- Building a robust corporate structure with the potential for external financing;
- Developing and implementing internal compliance systems, including AML, minority investor protections, and codes of conduct.
Approach
We designed the legal architecture of the project considering industry specifics and the unique characteristics of the energy base:
- Prepared legal opinions on the self-generation model for mining within industry and fiscal constraints;
- Assessed risks of the activity being classified as regulated under DFA and infrastructure operator laws;
- Developed a tax model, including a memorandum on VAT application, taxation of non-mining operations, and the possibility of separate accounting;
- Structured the project company to protect investors and maintain financing flexibility;
- Drafted internal corporate documents: governance policies, code of ethics, and policies for conflict-of-interest prevention and anti-money laundering;
- Provided legal support during the MVP (Minimum Viable Product) test launch.
Results
The project successfully completed the MVP phase. Test generation confirmed the economic viability of the model and its legal stability. Legal foundations were laid for scaling the project and moving to the next development phase with potential capital investment.
Significance
This is not the first project of its kind based on self-generated power, but it is truly unique due to its Arctic location, where geography allows no mistakes yet offers certain technical advantages, such as natural cooling for ASIC equipment. The combination of deep legal expertise and active involvement in management enabled the implementation of a model compliant with industry requirements and aligned with professional investors’ expectations.
