Cryptocurrency mining company Genesis Digital Assets was the largest venture investment made by Alameda Research, the sister company of FTX that was at the center of the exchange’s bankruptcy. Documents disclosed by Bloomberg on December 3 show that Genesis Digital raised $1.15 billion from Alameda in less than nine months.
The capital infusion was made before the cryptocurrency price crashbetween August 2021 and April this year. Genesis Digital is the leading bitcoin mining company based in the United States.Y not related to Genesis Capitalthe trading firm with $175 million worth of funds locked up in an FTX trading account.
Former FTX CEO, Sam Bankman-Fried, recently acknowledged having participated in Alameda’s risk decisions, including the investment in Genesis Digital, despite initially denying it to regulators. Based on the documents, the capital deployment was made by Alameda at four different times: $100 million in August 2021, $550 million in January, $250 million in February and $250 million in April 2022.
Last year, Genesis Digital raised a total of $556 million through two separate funding rounds to fuel its aggressive growth plans.. Some of the funds called for the purchase of 20,000 Canaan bitcoin miners, a new data center in Texas and the expansion of its operations in the United States and northern Europe.
The mining sector has seen how its profit margins have been reduced by the increase in energy costs and the bear market. Hashrate Index’s latest Q3 mining report highlighted several factors that have led to a significantly lower hash price and higher cost to produce 1 BTC. Revenue earned by Bitcoin miners fell to two-year lows to $11.67 million due to poor market performance and higher computational demand.
The recent FTX crisis is expected to make the crypto winter even longer as investor confidence has eroded. A Coinbase report shows that stablecoin dominance hit a new high of 18%, indicating that the liquidity crunch could drag on at least until the end of 2023.
Genesis Digital Assets did not immediately respond to Cointelegraph’s requests for comment.
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