Vasil Babluani co-founded “Nova Holding” with experienced European investors in cryptocurrencies and is preparing to launch a crypto mining plant and crypto fund in Tbilisi with our second respondent, Lorenzo Stroe.
Vasil, you have experience in many traditional business areas, including manufacturing, construction sector, and investment direction … You have decided to enter the crypto business, which is dangerous for many. Why?
Vasil Babluani: The “Nova Holding” project is a continuation of my other projects, as it also serves to bring and introduce Spanish experience and business in Georgia. In general, Georgia is a compelling country in terms of cryptocurrency. Getting European knowledge to our country is also essential in this regard. In addition, we see that the global cryptocurrency market is becoming more stable. Most importantly, future-oriented countries are preparing for the creation of blockchain sectors, laying the groundwork because they see that the future is right here. Therefore, now is the time to start thinking about it in Georgia and create projects in terms of cryptocurrencies.
However, the legal status of cryptocurrencies is unclear in the whole world. Regulators do not know whether to perceive it as an asset or as a means of payment. What perspective do you see in this direction in Georgia?
Vasil Babluani: There are more than 1,500 cryptocurrencies on the world market today. Accordingly, their purpose is diverse. Every type of cryptocurrency has its characteristics and form of use. Consequently, this or that cryptocurrency can be perceived as an asset as well as a means of payment. As for Georgia, the relevant regulations are still being developed in our country; however, we have optimistic expectations. So, the prospect of this market will also increase. Our project is also designed with a long-term perspective.
And risks?
Vasil Babluani: Risks accompany all businesses. The only difference is in the levels of risk. Improperly designed projects lead to an increase in threats, including in the crypto business. We believe that risks can be minimized if we assess them correctly in advance.
What risks do you see in the crypto business, and how will you deal with them?
Vasil Babluan: The main risk companion of cryptocurrency is the variability of its exchange rate in a rather large range. However, suppose the cryptocurrency is backed by a solid, well-calculated, legally guaranteed, and financially well-calculated project where all the risks are considered. In that case, obviously, the risks are minimized. The “Nova Holding” project is designed with such calculations in mind. It is supported by a five-member team of founders with experience in both the crypto- and blockchain sectors and traditional business.
Mr. Stroe, you have known the crypto industry since 2012. What became the reason for your interest in Georgia in this regard? Was it because of the cheapness of electricity?
Lorenzo Stroe: My choice was due to several circumstances: In 2021, while researching the European crypto market, I discovered a country – Georgia, which is one of the leading countries in terms of ease of starting and running a business. I also found that this country has an association agreement with the European Union. Another critical factor is that most of Georgia’s electricity is generated from renewable, environmentally friendly sources. Georgia is undoubtedly an attractive country for starting a crypto business.
Vasil Babluan: Lorenzo has experience working in cryptocurrencies. For example, in Estonia, Spain, Gibraltar, etc. He has published many cryptocurrencies. For me, the decision to enter this business with him was related to his experience and the results he and his team had.
Your plans include constructing and operating a 10 MW cryptocurrency plant in Tbilisi. What do you expect from this plant?
Vasil Babluani: The construction of the cryptocurrency plant has already started and will be completed in June. Hardware has already been ordered. Although the capacity of 10 MW is only for the initial stage, expansion is definitely planned in the future. In addition to bitcoin mining, Nova Holding has several areas in the crypto business: creating its own cryptocurrency, Nova Coin, mining hosting and creating a cryptocurrency, in which we will attract international investments and funds accumulated through blockchain technologies.
Within the framework of mining hosting, we will provide mining services to interested companies. According to our calculations, the interest in this type of service will increase over time, which will increase the scale of our factory.
How much investment do you make in the factory?
Vasil Babluani: The total for the first stage is about $ 30 million. However, we expect to remove it within one year from the plant’s launch.
Mention that your goal is to bring foreign capital accumulated through blockchain technologies to Georgia. How are you going to do that?
Vasil Babluan: We were on a business trip to Dubai last month. Dubai is also known for its cryptocurrencies, where the head offices of the most successful companies in this business are located. The crypto sector mainly involves the younger generation. They are also interested in investing in traditional businesses. We are working on several projects to bring this accumulated capital to Georgia, which will also help strengthen the country’s economy.
Professionals of different generations, who have accumulated capital through the blockchain sector, have already expressed a desire and willingness to invest part of their capital in a traditional business. Of course, “Nova Holding” will help them in this, our company is already actively working on it. The existence of a business based on modern technologies will be beneficial for Georgia and its economy.
Oversight bodies of EU securities, banking and insurance called on citizens a few months ago to pay maximum attention to unreliable organizations and be prepared for the total loss of money invested in cryptocurrencies. How do you provide security?
Lorenzo Stroe: Of course, this approach is correct, and any interested person, be it an investor or a consumer, must be careful and study in detail this or that project – what it is based on and what ensures its safety. In the case of our project, its reliability is ensured by its own cryptocurrency (which, in turn, is tied to one of the most stable cryptocurrencies in Bitcoin) and its cryptocurrency and management team with many years of experience.
The National Bank of Georgia plans to regulate cryptocurrency. As it is known, regulations will be imposed in the direction of money laundering, which imposes certain restrictions on trading platforms. What do you think the regulations should include in creating a secure environment?
Vasil Babluani: We think that cryptocurrency regulations are a necessity today. However, regulations must ensure transparency. Properly enforced regulations will be beneficial for the crypto market, increasing the size of the market and reducing the risks involved. At the same time, however, all this should not hinder the inflow of investments into the country.
It should be noted that recently representatives of FTX, one of the leading crypto companies in the world, visited Georgia. They were interested in the Georgian market, and we hope that they will open a representative office here as well. Therefore, in this sector, Georgia must bet on future projects, and we must prepare the market for investors to enter the country. The FTX visit was a positive signal for us in this regard.
You are mainly focused on generating Bitcoin, which is the business card of cryptocurrencies, although its price often changes dramatically. How does this affect your business?
Lorenzo Stroe: Bitcoin has proven to be one of the most stable cryptocurrencies throughout its existence. However, its price change is still happening for various reasons. Our company has certain types of leverage to mitigate the undesirable consequences of exchange rate changes. One of them is the transfer of accumulated capital into a traditional business.
As for the current year trends in terms of prices, we know that in 2021 the price of Bitcoin increased by almost 60%.
Lorenzo Stroe: Bitcoin counts 13 years of existence, which, you will probably agree, is not a long time. Over time, once the introduction of various regulations stabilizes the cryptocurrency market, it will become a future financial instrument. However, we do not expect any fundamental change in this regard this year. Only it can be said that its stable growth is expected in the future.
Where do you see the crypto business in 20 years?
Lorenzo Stroe: In 20 years, there will be cryptocurrencies based on real projects. I also think they will be an inactive collaboration with existing traditional currencies.
Vasil Babluani: There will be serious progress with the banks as well. Especially in some countries, for example, it is already legal in the Latin American region. We will see significant progress in a few years.
This interview was recorded for the May issue of Forbes Georgia in April 2022.
