Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion

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.
A company document indicates that 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.
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.
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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.
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 ...