Grayscale Investments, a major digital currency asset manager, partners with Foundry Digital to introduce a product that gives clients exposure to Bitcoin Mining Equipment. The new partnership led to the creation of Grayscale Digital Infrastructure Opportunities (GDIO)
What is GDIO’s Strategy?
According to the company’s factsheets:
- GDIO’s investment objective is to create an income stream that is differentiated from traditional income-oriented investments.
- GDIO will purchase mining hardware mine and sell bitcoin daily,
- Distribute a portion of its operating income to its investors every quarter.
Why is Grayscale creating this in the middle of a bear market?
To understand the company’s thesis, we need to learn how Bitcoin (BTC) mining works. BTC transactions are being secured and validated by more than a million mining hardware. The operators of these mining rigs are rewarded with BTC. They in turn will sell their rewards for profits.
BTC’s price has been steadily declining since the all-time high of $69,000 and because of this, miners are making fewer profits. This will lead to some unprofitable operators selling their equipment at a markdown. Grayscale will use this opportunity to acquire discounted mining equipment.
Grayscale is also subscribing to the four stages of the Mining cycle. Without going into the technical details, the company is simply building a solid foundation to take advantage of the last cycle which is aptly called the “Mining Gold Rush”. The company believes that the last cycle is the most profitable.
About Grayscale
Grayscale Investments, the world’s largest digital currency asset manager, was founded in 2015 by Barry Silbert. It has more than $46.65 billion in assets under management[i]
It is popularly known for its digital product GBTC (Grayscale Bitcoin Trust), the first-ever publicly traded trust with a digital currency as its underlying value. It allows companies and individuals to have exposure to BTC without actually managing it. The trust reportedly has more than 630,000 BTC which is approximately worth more than $12 billion.
About Foundry Digital
Foundry Digital is the sister company of Grayscale under the Digital Currency Group (DCG) umbrella. According to their website: “Foundry taps unparalleled institutional expertise, capital, and market intelligence to provide North American bitcoin miners and global manufacturers with the resources to build, maintain, and secure decentralized networks”.
How will it affect the Crypto Investors?
Just like GBTC, this investment will not be a right fit for everybody. There is a $25,000 minimum investment.
On the bright side, Grayscale is seeing profitability in the future. Why would a company invest in something that will not generate any return? We have to remember that the distressed miners sold their mining equipment because of BTC’s low price. Grayscale is probably expecting a price rebound in the future.
The hash or mining rates coming from their rigs will also help guarantee BTC’s continued network security and dependability.
Grayscale’s, continued venture into the crypto space is also a sign that its future is filled with investment opportunities.
