Before Sector Implosion, Alameda Made a Significant Bet on Crypto Miner Genesis

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Last Updated on December 4, 2022 by Bitfinsider

The largest venture investment made by Alameda Research, FTX’s sister firm and the company at the center of the exchange’s insolvency, was in the crypto mining startup Genesis Digital Assets. In less than nine months, documents revealed that Genesis Digital raised $1.15 billion from Alameda.

The financial injection occurred between August 2021 and April of this year, prior to the decline in cryptocurrency values. The largest Bitcoin mining operation in the United States is called Genesis Digital, and it is unrelated to Genesis Capital, a trading operation that has $175 million in cash hidden away in an FTX trading account.

Despite first denying it to regulators, former FTX CEO Sam Bankman-Fried recently acknowledged taking part in Alameda’s business choices, including the investment in Genesis Digital. According to the paperwork, Alameda allocated the funds at four distinct times: $100 million in August 2021, $550 million in January, $250 million in February, and $250 million in April 2022.

In order to fund its ambitious growth objectives last year, Genesis Digital secured a total of $556 million through two distinct investment rounds. Some of the money was intended to build a new data center in Texas, expand operations in the United States and Northern Europe, and buy 20,000 Bitcoin miners from Canaan.

Rising energy prices and the bear market have both reduced the mining industry’s profit margins. Hashrate Index’s most recent Q3 mining report outlined a number of reasons that contributed to a much lower hash price and greater cost to create 1 BTC. Due to weak market performance and a higher computational demand, Bitcoin miners’ revenue decreased to $11.67 million, a two-year low.

The latest FTX issue is anticipated to prolong the crypto winter because it damaged investor trust. According to a research, stablecoin dominance hit a record high of 18%, suggesting that the liquidity crisis may last at least through the end of 2023.


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