(Kitco News) - Grayscale, the world's largest cryptocurrency asset manager, has revealed the launch of a new investment product that is designed to give investors exposure to Bitcoin mining hardware.
Grayscale Digital Infrastructure Opportunities LLC ("GDIO") is a private, co-investment opportunity that is "designed to capture (the) upside of crypto winter," Grayscale said.
According to the announcement, Grayscale will leverage the operating expertise of Foundry – its affiliated digital asset mining, staking and infrastructure firm – to manage the day-to-day operations of GDIO in a first-of-its-kind product suite offered by the asset manager.
"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. "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."
Eligible individual and institutional accredited investors can now begin investing in GDIO, which is considered an operating business and not a registered investment company under the Investment Company Act. This means that investors do not have the regulatory protections provided to investors in investment companies.
Funds invested into the new product will be put towards purchasing mining equipment, according to Rayhaneh Sharif-Askary, Grayscale head of investor relations, who expects to see a lot of low-priced mining machines put up for sale in the coming months amid the ongoing crypto winter.
"In the coming months, we anticipate some miners will be forced to liquidate their mining equipment," Sharif-Askary said. "GDIO is positioned to provide liquidity to these miners, purchasing mining equipment at distressed prices, and mining profitably as the price of Bitcoin recovers."
Once the new equipment is acquired, it will be deployed to "mine bitcoin, sell bitcoin daily, and distribute cash generated to investors, generating income," Sharif-Askary added. "While a lot of 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."
Foundry, which operates one of the largest mining pools in the world, Foundry USA, will manage the day-to-day operations of the GDIO. Both Foundry and Grayscale are subsidiaries of the Digital Currency Group (DCG).
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Grayscale shifts things in-house
This announcement follows news from earlier in the week that Grayscale Investments has terminated two agreements with cryptocurrency broker Genesis around its Grayscale Bitcoin Trust.
According to the SEC filing, Genesis will no longer assist Grayscale in the distribution and marketing of its shares and will no longer be an authorized participant of the trust but will continue to serve as a liquidity provider for Grayscale.
Grayscale Securities LLC, a wholly-owned subsidiary of Grayscale Investments LLC and an affiliate of Grayscale Bitcoin Trust, will now manage the responsibilities previously handled by Genesis.
