Grayscale And Foundry Partner To Introduce A Bitcoin Mining Investment Product – Bitcoin (BTC/USD), GRAYSCALE BITCOIN TRUST by Grayscale Bitcoin Trust (BTC) (OTC:GBTC)
Bitcoin BTC/USD asset management company Grayscale announced a new investment product that gives investors exposure to Bitcoin mining equipment.
The fund will generate money to buy Bitcoin ASIC computers, which Foundry Digital will run to mine and trade Bitcoin for investors.
The asset management firm’s strategic mining game
The objective of Possibilities for digital infrastructure in shades of grey (GDIO) is to provide an income stream that differs from “conventional income-oriented investments,” as stated on the company’s website.
The company intends to purchase mining equipment, acquire and sell Bitcoin on a daily basis and transfer operating profits to investors once every three months.
“After talking to Mike Colyer [CEO of Foundry] and the Foundry team about crypto winter, we agreed that there was an opportunity to connect investors directly with crypto mining,” Grayscale CEO Michael Sonnenshein so on Twitter. “GDIO is the result,” he added.
Compared to the all-time high of November 2021, the price of Bitcoin and other major cryptocurrencies has fallen nearly 70%, wiping out billions of dollars of investors’ wealth and bankrupting several major firms.
Also read: EXCLUSIVE: Kucoin in talks to buy out ailing crypto companies, CEO says
Bitcoin miners were among such businesses, and as the value of Bitcoin fell, so did their earnings from minting new Bitcoin.
Opportunity to buy mining equipment at a deep discount
Since mining is currently less profitable than it was in the past, a key component of GDIO’s investment mission is the ability to purchase Bitcoin mining equipment at deeply discounted prices.
The company is betting that Bitcoin will eventually see a price increase as part of a four-stage mining cycle called “Rising Bull”, “Mining Gold Rush”, “Inventory Flush” and “Shakeout”.
Grayscale claimed that the mining cycle has now reached the “Inventory Flush” stage, where the hash rate is still high, but the price of Bitcoin has dropped significantly.
The idea stated that the subsequent “Shakeout” will result in a reduction in hash rate as miners are forced to shut down their equipment.
“Historically, it is most profitable to deploy capital in a ‘Shakeout’ phase and exit in a ‘Mining Gold Rush’ phase,” the company says.
Grayscale has Bitcoin worth nearly $13 billion
Shades of Gray currently controls the world’s largest Bitcoin fundwhich is responsible for holding more than 600,000 Bitcoin worth around $12.7 billion.
That’s more than 3% of the entire offer online.
Through a more conventional investment offering, the fund gives investors broad exposure to the price of Bitcoin.
The Grayscale Bitcoin Trust GBTChowever, is now trading at one of its largest ever discount rates, meaning the value of each share is lower than the value of the underlying Bitcoin it is meant to represent.
Photo: yuRomanovich via Shutterstock
