Grayscale Partners with Foundry to Launch Bitcoin Mining Investment Product Cryptocurrency
Grayscale Partners with Foundry to Launch Bitcoin Mining Investment Product Cryptocurrency
Grayscale – the world’s largest cryptocurrency asset manager – has announced a new investment product offering exposure to Bitcoin mining hardware.
The fund will raise funds to purchase Bitcoin ASIC machines , which will be operated by Foundry Digital to mine and sell Bitcoin on behalf of investors .
Grayscale ’s strategic mining game According to Grayscale website Grayscale Digital Infrastructure Opportunities LLC ( GDIO ) aims to create an income stream that differentiates itself from “traditional income-oriented investments”.
The company will aim to purchase mining equipment, buy and sell bitcoin daily, and distribute operating income to investors on a quarterly basis.
“After speaking with Mike Colyer [CEO of Foundry ] and the Foundry team about the crypto winter, we agreed there was an opportunity to directly connect investors with crypto mining ,” Grayscale CEO Michael Sonnenshein said on Twitter Thursday. “ GDIO is the result.”
The “ crypto winter” of 2022 saw the price of Bitcoin crash 70% from its highs of last November, dragging several companies in the crypto industry down with it. Some of these companies included Bitcoin miners who have seen their effective profits from minting new Bitcoins decrease in exact proportion to its price .
Given that mining is now less profitable than during the bear market, a focal point of GDIO ’s investment thesis is the ability to buy Bitcoin mining machines at distressed levels.
The organization is betting on Bitcoin returning to higher prices across the board, in a four-stage mining cycle: the “Rising Bull”, the “ Mining Gold Rush”, the “Inventory Flush” and the “ Shakeout ”.
Grayscale said the mining cycle has now entered its “inventory flush” phase, where the hash rate remains high, but Bitcoin ’s price has fallen significantly. According to the theory, the ensuing “ shakeout ” will cause the hash rate to drop, with miners being forced to shut down their machines .
“Historically, deploying capital in a ‘ Shakeout ’ phase and exiting in a ‘ Mining Gold Rush’ phase is the most profitable,” the company said.
The product is only open to accredited investors and requires a minimum investment of $25,000.
A long-term commitment Sonnhenshein and Colyer held a taped chat about their partnership in person. Sonnenshein explained that for Grayscale , GIDO will provide a “complementary” investment opportunity, alongside the asset manager’s other products.
For Foundry , Colyer pointed out that now is “a really good time to start leaning in and reinvesting in the space.”
“We think there will be a lot of opportunities to continue to grow the network…and we think in the long run it’s a great investment ,” he said.
Grayscale currently owns the largest bitcoin fund on the planet, responsible for holding over 600,000 bitcoins worth around $12.7 billion. This is more than 3% of the total network supply.
The fund provides investors with broad exposure to the Bitcoin price through a more traditional investment offering. However, the Grayscale Bitcoin Trust (GBTC) is currently trade at one of its highest discount rates ever, meaning its share is worth less than the underlying Bitcoin it purports to represent.
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