The crypto mining company Genesis Digital Assets was Alameda Research’s biggest investment before everything went wrong. In total, the miner made it in less than 9 months raised $1.15 billion from Alameda Research.
Perfect timing
The timing of the investments in the miner is also striking. Alameda Research’s capital injection for Genesis Digital took place from August 2021 through April 2022. So that was just before the woes at Terra started and with it the chain reaction of bankruptcies within the industry. Incidentally, Genesis Digital, the miner, is not affiliated with Genesis Capital, the trading house that has 175 million in funds at FTX.
Sam Bankman-Fried initially denied to lawmakers that he was involved in the Alameda Research acquisitions. In retrospect, he has his involvement admittedly anyway. The documents show that Alameda Research entered Genesis Digital in four steps. It was $100 million in August 2021, $550 million in January 2022, $250 million in February 2022 and $250 million in April 2022.
Last year, Genesis Digital raised a total of $556 million in capital, divided over two separate funding rounds. This capital was needed to finance the company’s aggressive growth plans. For example, it used part of the funds to fund Canaan’s 20,000 Bitcoin miners, a new data center in Texas, and the expansion of its US and Northern European operations.
Problems for mining
Besides the fact that Genesis Digital loses an important financier with the collapse of FTX, the mining industry is also under considerable pressure. The hashrate is currently very high, which means that the competition among miners is huge. Furthermore, miners have to deal with high energy prices, which also does not help to keep their heads above water. To top it off, of course, we’ve been in a bear market for months now.
That is a triangle of misery that miners do not like to be in. It should therefore come as no surprise that many miners have been forced to sell their Bitcoin reserves in recent months. There is a chance that these circumstances will kill several miners in the coming months. Which of course also creates opportunities for part of the industry.
