Fundamental Labs Fund to Invest $44 Million in Brand-New Bitcoin Miners

Fundamental Labs, a blockchain fund manager that's backed Binance, Coinbase and Canaan Creative, is investing $44 million in top-of-the-line bitcoin miners, a longer-term bet than most are making in the sector.

"Mining is the fundamental block to support the whole crypto ecosystem. That's why we invest in mining farms, equipment and pools and participate in mining ourselves," Howard Yuan, managing partner of Fundamental Labs, told CoinDesk.

Unlike what most retail miners have been doing - buying second-hand miners ahead of the summer - Yuan's firm is maximizing its mining scale by investing in the latest and most powerful equipment on the market, such as Bitmain's AntMiner S17. The unit price of these newest mining models made by manufacturers like Bitmain, InnoSilicon and MicroBT, ranges from $1,500 to $2,000 each, and will be ready for shipment in large quantities over the next two months.

The capital for this investment comes from a 300 million yuan, or $44 million, mining fund that Fundamental Labs recently closed, which is the first phase of its overall plan to raise 1 billion yuan this year exclusively for further deployment in cryptocurrency mining.

Because it's using brand new products, Yuan said Fundamental also will be less risk-averse than individual miners when facing bitcoin's price volatility.

"We think crypto mining will become more institutionalized in the future. It's crypto capitalism. Retail miners will be gradually squeezed out because of challenges like price volatility and increasing computing difficulties."

Such new capital entering the crypto mining space with more powerful equipment will likely give another boost to bitcoin's total hash rate in the coming months.

On May 2, the bitcoin network's total computing power reached a six-month high above 58,000 PH/s. Mining farm operators in China previously estimated this figure will go up to 70,000 PH/s during the summer.

Yuan said with the plan to raise a total of $150 million for its mining fund this year, the firm will further build up and maintain a mining scale that consumes about 200,000 kilowatts per hour.

By comparison, mining giant Bitmain currently owns about 2,000 PH/s, or four percent, of the bitcoin blockchain's computing power.