Grayscale Investment is set to establish a Bitcoin mining arm and buy equipment at offer prices. According to an October 6 announcement, the move will help the company to provide co-investment opportunities to accredited investors.
The Bitcoin mining arm, coined “Grayscale Digital Infrastructure Opportunities LLC” (“GDIO”), will operate as a co-investment opportunity offering Bitcoin mining hardware. GDIO will also power the Bitcoin mining ecosystem.
According to Grayscale’s head of investor relations, Rayhaneh Sharif-Askary, the mining equipment will be acquired at discounted prices. He said:
“GDIO will then deploy this equipment to mine bitcoin, sell bitcoin daily, and distribute cash generated to investors, generating income.”
With this new product, Grayscale is looking to fill a gap in the market.
“While many people have exposure to cryptocurrencies themselves, it’s significantly more difficult for the everyday investor to source, store, and operate mining equipment to generate a profit mining bitcoin.”
According to Rayhaneh, the Foundry staking infrastructure firm will manage the day-to-day operations. Foundry runs Foundry USA, one of the biggest mining pools globally, under the same umbrella company as Grayscale, the Digital Currency Group. They partnered with Grayscale on a joint mission to expand the ability to invest in Bitcoin mining. Foundry CEO Michael Colyer said:
“As part of Foundry’s mission to empower a decentralized infrastructure, we’re excited to partner with Grayscale to broaden the ability to invest in bitcoin mining during this opportune time.”
In 2021, following China’s decision to ban crypto trading and mining activities in the country, Foundry USA quickly ascended to become the first runners up in the list of largest Bitcoin mining pools worldwide.
Criteria for Onboarding as a Co-Investor
The new organization will be available to eligible individuals and accredited institutional investors at a threshold investment of at least $25,000. Criteria for onboarding are that accredited investors must attain a specific bar in terms of income, net worth, qualifications, and knowledge of financial markets.
According to a Bloomberg report, the funding is expected to finalize by the end of 2022. It will emulate private equity or infrastructure assets with a 3-5 year investment horizon in offering liquidity. Grayscale CEO Michael Sonnenshein weighed in on the developments during a press statement saying:
“Our team has long been committed to lowering the barrier for investing in the crypto ecosystem — from direct digital asset exposure to diversified thematic products and infrastructure through GDIO.”
With Grayscale looking to leverage the slump in cryptocurrency prices, the firm’s decision to set up a new investment product focused on Bitcoin mining hardware is indeed tactical. The new development will help Grayscale Investment capture the upside of crypto winter.
Firms Looking for Consolidation Opportunities
Amid the bear market and increased energy costs, more firms continue to seek consolidation opportunities in the Bitcoin mining space. This which makes Grayscale’s vision for a BTC mining arm very timely.
Several firms have made groundbreaking steps to leverage prevailing market conditions and rake thousands of mining machines at throwaway prices. One firm whose actions have stood out is CleanSpark crypto mining firm.
In September, CleanSpark disclosed a signed contract to acquire Mawson’s Bitcoin mining facility in Sandersville, Georgia. According to the agreement, the acquisition would cost $33 million. A week before that announcement, CleanSpark also published a purchase deal with Cryptech Solutions, paying $28 million to acquire Cryptech’s 10,000 Bitmain Antminer S19j Pro units.
Moreover, CleanSpark also has a history of buying more than 1,000 Bitcoin miners from Whatsminer M30S at an enticing price, just one month after the mining company took possession of 1,800 Antminer S19 XP rigs.