Grayscale – the world’s largest crypto asset manager – has announced a new investment product that provides 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 play
According to Grayscale’s websiteGrayscale Digital Infrastructure Opportunities LLC (GDIO) aims to create an income stream that differentiates itself from “traditional income-oriented investments”.
The company aims to purchase mining hardware, buy and sell bitcoin daily, and distribute operating income to investors on a quarterly basis.
After speaking with Mike Collier [CEO of Foundry] And the Foundry team about crypto winter, we agreed that there was an opportunity to connect investors directly to cryptocurrency mining,” said Grayscale CEO Michael Sonnenchin. Twitter Thursday. “GDIO is the result.”
The ‘crypto winter’ of 2022 saw the price of bitcoin drop 70% from its highs last November – with many cryptocurrency makers. Some of those companies included Bitcoin minerswhich has seen its actual profits from minting new bitcoins fall in exact proportion to its price.
Given that mining is now less profitable than it was during a bear market, the central point of the GDIO investment thesis is the opportunity to buy bitcoin miners at faltering levels.
The organization is betting on a return of bitcoin to higher prices below the line, as part of a four-stage mining cycle: “bullish bull”, “mining gold rush”, “stock flow” and “shake”.
Grayscale said that the mining cycle has now entered the “stock flow” phase, where the hash rate is still high, but the price of Bitcoin has fallen dramatically. According to the theory, the subsequent “jolt” will result in a lower hash rate as miners are forced to shut down their machines.
“Historically, it has been the most profitable to invest capital in the ‘shake-up’ phase and exit from the ‘gold mining’ phase,” the company said.
The product is only open to accredited investors and requires a minimum investment of $25,000.
LONG TERM COMMITMENT
Sonnhenshein and Colyer had a recorded discussion of their partnership in person. Sonnenshein explained that for Grayscale, GIDO will provide a “complementary” investment opportunity, along with other asset manager products.
For Foundry, Collier emphasized that now is “a really good time to start leaning and start investing again in space.”
“We think there will be a lot of opportunity to continue building the network…and we think over the long term, it’s a great investment,” he said.
Grayscale currently has the largest Bitcoin fund on the planet, responsible for owning more than 600,000 Bitcoins worth nearly $12.7 billion. This represents more than 3% of the total network supply.
The fund gives investors public exposure to the price of Bitcoin through a more traditional investment offering. However, Grayscale Bitcoin Trust (GBTC) currently exists trade With one of the highest discount rates ever – which means its shares are worth less than the base Bitcoin it’s supposed to represent.
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