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Editor's note: This article and its headline were updated after publication to clarify how the Bitcoin Discovery Fund will be registered and how shares will be sold, per additional information from EnergyFunders.
Texas crowdfunding platform EnergyFunders has started selling equity shares of Bitcoin mining operations through its Bitcoin Discovery Fund.
According to an SEC filing submitted yesterday, the company will sell equity in Bitcoin mining operations attached to off-grid natural gas mining rigs for $5,000 per share. The company said in the filing it will sell up to $10 million worth of shares.
That means accredited investors can fund the Bitcoin mining for a minimum $5,000 investment and receive monthly payouts.
If Bitcoin stays within the $45,000 price range, EnergyFunders estimates investors will see returns “above 100%.” The mined Bitcoin will be distributed among investors each month, in either U.S. dollars or Bitcoin.
The first Bitcoin miner, a 1-megawatt rig, got turned on yesterday in Bee County, Texas, EnergyFunders CEO Laura Pommer, told Decrypt. She pitched it to the team at EnergyFunders as a way to monetize stranded wells, which are not hooked up to the electrical grid.
“Of course, they’re like, ‘Hell yeah.’ So we started down that path and quickly discovered that mining Bitcoin is actually fairly complicated,” she said, “Which is fine, you know. Oil and gas people never shy away from complicated operations. It's sort of our bread and butter, actually.”
EnergyFunders launched in 2015 as a crowdfunding platform to match accredited investors with independent oil and gas producers. In 2018, the company became a FINRA-approved crowdfunding platform and was able to start allowing non-accredited investors to participate in funding opportunities.
EnergyFunders registered its Bitcoin Discovery Fund as a Regulation D offering under the Rule 506(c) exemption, which is specifically for crowdfunding from accredited investors.
It’s a little like how Republic, which is a registered crowdfunding platform, has been able to offer what it calls “Security NFTs” that entitle holders to a portion of an artist’s song royalties. In Republic's case, the music artists are funding their careers by promising to share future profits with NFT owners.
But unlike Republic, EnergyFunders needs to offer its new fund on a separate platform from the oil and gas companies looking for capital.
That’s because the SEC allows for two types of crowdfunding portals. The first, like the EnergyFunders Marketplace, pairs people raising capital with investors. In that scenario, EnergyFunders is a neutral third party. The second type pairs investors with a company’s own offerings, like the Bitcoin Discovery Fund.