Grayscale's New Co-Investment Initiative To Capitalize On Crypto Winter

Digital asset investment manager Grayscale has launched a new co-investment initiative that will enable investors to take advantage of the prevailing crypto winter.

The firm formed Grayscale Digital Infrastructure Opportunities (GDIO), which is "a private, co-investment opportunity in mining hardware that powers the Bitcoin ecosystem," it announced Thursday.

Grayscale and its sister firm, Foundry, are part of the Digital Currency Group (DCG). The investment management firm will leverage the operating expertise of its affiliated crypto mining and staking infrastructure firm as the latter will be responsible for running the day-to-day operations of the newly formed GDIO.

In an interview with Yahoo Finance, Grayscale CEO Michael Sonnenshein said the firm will use the funds raised from accredited investors to purchase "new and distressed" crypto mining equipment from various firms that are currently experiencing financial troubles. The investment management firm will also invest in existing mining businesses. Foundry will use the new equipment to mine Bitcoin and in return, the investors will be provided dividends in BTC.

Crypto mining firms like Compute North, which recently filed for bankruptcy, have been having a rough period due to a decrease in the price of BTC and high cost of energy required to run mining rigs. Grayscale will now purchase equipment from such firms and use them to generate BTC using the funds provided by investors in GDIO.

"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 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."

Interestingly, Grayscale's new investment offering is only for high-net-worth individuals, family offices and hedge funds, as well as pension and endowment funds that do not allow people to directly invest in crypto.

"We believe that we're at an inflection point in the bitcoin mining cycle and we want this [operating company] to have the flexibility to deploy its capital opportunistically," Sonnenshein said.

The announcement comes amid Grayscale's legal battle with the Securities and Exchange Commission (SEC) over the rejection of the investment management firm's request to turn its flagship product GBTC into a Bitcoin Spot exchange-traded fund (ETF).