By Alicia Maher
While the crypto market is still undergoing turmoil, Grayscale is venturing into Bitcoin mining. The firm is asking investors to embark on this new journey and put their money in.
Opening Up Opportunities
The crypto investment firm is launching the LLC alongside Foundry, its sister company. They are both managed under the Digital Currency Group.
It said it will use funds from investors to purchase mining equipment. It will also draw from the fund to finance mining businesses already running.
Equipment acquired by the new venture will be put to mining Bitcoin for Foundry USA. It is the world’s largest Bitcoin pool. Bitcoin in that way will be shared among investors as a cash benefit.
Michael Sonnenshein, the company’s CEO, spoke with the media about the matter. He said Grayscale believes it is at a point of inflection in Bitcoin mining. And they want the company to have the opportunity of deploying opportunistically.
Sonnenshein said the company would be called GDIO. The investment offer is for individuals of high net worth. Other targets are hedge funds, and pension and endowment funds. These are establishments that are not permitted to directly invest in crypto.
Bitcoin uses the proof-of-work protocol to secure and validate transactions. The mechanism enables ASIC computers to compete with power contributions while they get Bitcoin in return.
Miners can pull their resources together in order to increase their chances. This is what GDIO is trying to achieve with funds from investors.
Capital Intensiveness
Mining Bitcoin requires a lot of capital and a lot of power to carry on operations. Due to that, the mining sector has suffered a huge hit. The increase in interest rates is one of the big hits.
The high cost of energy has also contributed immensely to the crisis. For example, one of the biggest providers of data centers has filed for bankruptcy.
The company stated that it owes $128 million worth of long debt. This includes financing and an equipment loan to Foundry to the tune of $7.4 million.
Despite such events, crypto supporters say the dip has created new opportunities. It is in contrast to the crowded system last year as crypto reached its peak.
Investing in crypto in distressing times is not just in mining. FTX bought customer accounts from Voyager after an auction some months back. The deal was worth $50 million.
Wave Financial, a crypto investment company, has said it will bid for Celsius. FTX is also in the bid. Sonnenshein said he is seeing other distressed buying opportunities across the mining sector.
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