Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion (2024)

One of the bigger questions surrounding the collapse of Sam Bankman-Fried’s crypto empire is what venture investments his trading firm Alameda Research poured billions of dollars in.

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Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion (1)

Bloomberg News

Yueqi Yang and David Pan

Published Dec 02, 20222 minute read

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(Bloomberg) — One of the bigger questions surrounding the collapse of Sam Bankman-Fried’s crypto empire is what venture investments his trading firm Alameda Research poured billions of dollars in.

Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion (2)

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It appears his largest bet was on the Bitcoin mining company Genesis Digital Assets during the height of the crypto gold rush. Alameda continued to pour money into the firm even as the price of Bitcoin tumbled and soaring energy costs wreaked havoc across the industry.

Alameda has invested a total of about $1.15 billion in Genesis Digital, valuing the company at $5.5 billion in an April fund-raising round, according to an internal spreadsheet listing FTX and Alameda’s venture portfolio obtained by Bloomberg News. The miner isn’t related to crypto lender Genesis, whose lending unit has halted customer withdrawals.

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Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion (3)

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The investment spanned across four rounds between August 2021 and April this year. An initial injection of about $100 million was made last August, followed by another $550 million in January, $250 million in February and $250 million in April. The total amount makes it Alameda and FTX’s biggest venture bet, according to the spreadsheet.

Representatives of Genesis Digital, which has its roots in Iceland, didn’t respond to requests for comment. Caroline Ellison, the head of Alameda Research, didn’t respond to a request for comment.

In the most recent crypto boom, miners were able to raise billions of dollars from the equity market and lenders at generous terms, often using the equipment purchased as collateral on loans. In the first half of this year, the Bitcoin mining industry saw as much as 90% profit margins.

But the mining industry quickly went from one of the most lucrative corners in the digital world to one of the most distressed sectors, given the plunge in Bitcoin, soaring energy costs and more competition among miners. Some of the largest mining companies are on the verge of bankruptcy with a key mining revenue gauge falling to a record low.

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Genesis Mining, the predecessor of Genesis Digital Assets, was one of the oldest mining companies, opening its first facility in Iceland in 2014. It had large-scale mining operations in China before the government imposed a sweeping ban on crypto mining last May. Marco Streng, the founder, later started Genesis Digital Assets in April 2021 as he shifted focus to self-mining Bitcoin rather than being a crypto-service provider, according to his blogpost on Linkedin.

“We’re going big,” Streng said in the LinkedIn post in June 2021, about two months before Alameda made its first investment to the company. Other investors included Paradigm, NYDIG, Ribbit, Electric Capital and Skybridge Capital.

With the funding, Genesis Digital Assets embarked on a rapid expansion plan across the US. It has secured over 700 megawatts of power for its mining operations in Texas, South Carolina and North Carolina over the first six months of 2022, making the company a major Bitcoin miner in the country.

Now miners are shuttering facilities as the crypto downturn grows longer. And billions of dollars of other FTX and Alameda assets remain unaccounted for.

—With assistance from Hannah Miller.

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Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion (2024)

FAQs

Is Genesis Mining real or fake? ›

Genesis Mining is a technology company and the world's leading provider for Bitcoin and altcoin cloudmining. We offer our clients easy access to small, medium and large mining contracts. Multipool techniques are used to automatically convert altcoins to Bitcoin, which are daily transfered into customer wallets.

What happened to Genesis Mining Company? ›

Genesis, the crypto-trading business walloped by last year's collapse of Three Arrows Capital and FTX, has ceased all trading operations, according to a spokesperson.

How much does Genesis Mining payout? ›

Genesis mining payouts vary from $30 to $2,000, depending on the amount of power rented. And, according to the official website, there is no payment for electricity or any other extra fees. Besides their tariff plans, users can create their own ones by setting the options they need.

How long has Genesis Mining been around? ›

When was Genesis Mining founded? Genesis Mining was founded in 2013.

Who owns Genesis crypto? ›

In one sense, Genesis, a crypto company owned by Barry Silbert had it, but even that wasn't quite true. Soon-to-collapse hedge funds with names like Three Arrows Capital and Alameda Research — Sam Bankman-Fried's personal fund — were quietly borrowing from Silbert's shop.

Is Genesis trusted? ›

Many continue to ask, however, “Is Genesis a reliable car?” According to the experts, the answer is a resounding “Yes!” Take a deep dive in the Genesis reliability scores below with Allen Turner Genesis.

Is Genesis crypto in trouble? ›

The company filed for bankruptcy in January 2023. User funds had been frozen since November 2022 when the crypto lender ran into liquidity issues following the collapse of FTX.

Why did Genesis collapse? ›

CREDITORS' CLAIMS

Genesis was locked in a dispute with Gemini over a crypto lending product called Earn that the two firms jointly offered to Gemini customers. The Winklevoss twins have said Genesis owed more than $900 million to some 340,000 Earn investors.

What is the Gemini Genesis lawsuit? ›

The lawsuit alleged that Gemini knew Genesis' loans were under-secured and at one point highly concentrated with one entity, Sam Bankman-Fried's Alameda, but did not reveal this information to investors. Last month, Attorney General James secured $2 billion from Genesis for defrauded victims.

What is the highest paying crypto miner? ›

The Bitmain Antminer S21 Hyd 335T is the most profitable Bitcoin mining machine currently, followed by the Canaan Avalon Made A1266, and MicroBit Whatsminer M50S. If you want to mine other cryptocurrencies, the Bitmain Antminer KS3, Bitmain Antminer D9, and Bitmain Antminer K7 are all solid choices.

Who is the CEO of Genesis Mining? ›

Marco Andreas Streng is the chief executive officer and cofounder of Genesis Group, a cryptocurrency business based in Iceland that is one of the largest bitcoin and ether mining operations. In 2016 he founded the Logos Fund, the first regulated fund for bitcoin and cryptocurrency mining in the world.

What is the highest profit crypto to mine? ›

Bitcoin (BTC)

Bitcoin is the largest crypto by market capitalization and the most popular cryptocurrency to mine, with a reward of 3.125 BTC per block.

How reliable is Genesis Mining? ›

Despite some negative experiences reported by some users, many have found Genesis Mining to be a reliable provider that offers efficient rigs for rent to clients. The site is user-friendly with an easy-to-navigate layout that makes it easy for users to find the most efficient cryptocurrency to mine.

How many Bitcoin were in the Genesis block? ›

The genesis block on the Bitcoin blockchain created the first 50 bitcoins, which are contained in what is called the Genesis address, the first address published on the blockchain.

Where is Genesis Mining farm? ›

Services. Their services allow customers to purchase mining contracts, which allow them to mine Bitcoin and altcoin through a cloud-based computer network. Their mining farms are based in Iceland, Canada, and Bosnia.

Is Genesis Trading legit? ›

Overall, Genesis FX appears to be a reliable and trustworthy brokerage firm for traders looking to diversify their investment portfolio with cryptocurrencies and other assets. However, traders should do their own research and exercise caution before investing in any asset.

What mining site is legit? ›

Some legitimate websites for mining Bitcoin include popular platforms like Genesis Mining, Hashflare, and NiceHash. These sites offer mining services where you can rent mining equipment or hash power to mine cryptocurrencies like Bitcoin.

Is crypto mining real or fake? ›

Providing cloud mining services—otherwise known as mining-as-a-service—is a legitimate business, but some cloud mining companies are fraudulent.

Is there any legit mining app? ›

Binance Pool Mining – Purchase Real Bitcoin Mining Contracts From Just $23.04. Next on this list of crypto mining apps for Android is Binance. Considered one of the best crypto exchanges – now boasting over 200 million users, Binance offers Bitcoin mining contracts.

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