Grayscale’s New Venture Aims to Capture Bear Market Opportunities in Bitcoin Mining

Crypto asset management firm Grayscale is forming an investment vehicle that will help investors take advantage of the low prices of bitcoin mining infrastructures amid a continued crypto winter.

The private co-investment vehicle, Grayscale Digital Infrastructure Opportunities (GDIO), will partner with digital asset mining and staking infrastructure firm Foundry for its day-to-day operations, according to a statement. Grayscale and Foundry are both subsidiaries of Digital Currency Group (DCG), which is the parent company of CoinDesk.

The crypto winter has clearly been rough for the miners, who have seen profit margins shrink as bitcoin prices plunged more than 50% this year while power prices soared and capital dried up. This has directly hurt prices for infrastructures required for bitcoin mining, including the highly specialized computers, which were in high demand during last year’s bull run, driving up prices to all-time-highs, according to an index maintained by Luxor Technologies. Prices for the mining machines have since crashed near their 2020 lows this year and in some instances, even the largest manufacturers, such as Bitmain, are offering large discounts to sell their mining rigs.

Read more: Bear Market Could See Some Crypto Miners Turning to M&A for Survival

“Grayscale’s unique position at the center of the crypto ecosystem enables us to create offerings that allow investors to put capital to work through differing market cycles,” said Grayscale CEO Michael Sonnenshein in the statement. “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 now infrastructure through GDIO,” he added.

As the bear market is the perfect opportunity to build, some industry participants have taken the plunge to deploy capital into the struggling mining sector. “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," said Foundry CEO Michael Colyer.

Last month, Crypto billionaire Jihan Wu – the founder of Bitmain – was reported to be setting up a $250 million fund to purchase distressed assets from mining firms. Meanwhile, decentralized finance (DeFi) firm Maple Finance said that it is starting a lending pool with $300 million capacity for mid-size bitcoin miners across North America and Australia.

Read more: CleanSpark Takes Advantage of Bear Market to Acquire Mining Rig Contracts