Bitcoin Miner Genesis Digital Reportedly Eyes U.S. IPO

Alameda Research, the sister trading firm of the failed FTX exchange, invested $1.15 billion in Genesis Digital.

Genesis Digital Assets is the latest mining firm to eye a public offering.

Genesis Digital Assets (GDA), a major Bitcoin mining company, is reportedly planning an initial public offering (IPO) in the United States, according to a July 2 report from Bloomberg.

The report claims that internal documents reveal that GDA boasted a $5.5 billion valuation as of its most recent funding in April 2022. Notably, Alameda Research, the sister trading firm of the bankrupt FTX exchange, invested $1.15 billion in the round.

The company is now seeking advice from consultants and intends to launch a pre-IPO funding round in the next few weeks, anonymous sources familiar with the matter told Bloomberg.

GDA operates over 20 data centers across four continents and boasts a total power capacity exceeding 500 megawatts.

The company has recently sought to expand its operations, announcing a new facility in Texas with a 36-megawatt power capacity in April. The company said the facility added 1 exahash per second (EH/s) to its total hashrate capacity.

In May, GDA launched a mining center in Argentina.

A gift to FTX creditors?

Although details regarding the rumored IPO are scant, the offering may serve as a boon to FTX’s creditors, with GDA shareholders expected to sell a portion of their interest in the company to the public.

FTX filed for bankruptcy in November 2022, lifting the lid on among the largest frauds in CeFi’s history. The company was revealed to have misappropriated billions in customer assets, much of which was funneled into Alameda Research — which was heavily exposed to fallout from the collapse of Terra in May of the same year.

In October 2023, during the trial of Sam Bankman-Fried, FTX’s founder and CEO, Peter Easton, an accounting professor hired by the Department of Justice to trace FTX’s financial flows, testified that Alameda may have FTX customers’ deposits to purchase its shares in GDA.

Last week, FTX received court approval to solicit creditor votes on a proposed liquidation plan that would repay customers in cash based on the value of their holdings at the time of the exchange’s collapse. However, the plan has received criticism for failing to adjust customer balances in response to the rising price of crypto assets since the company’s failure.

Bitcoin miner revenue drops

This comes as many Bitcoin miners face significant financial challenges following Bitcoin’s fourth halving event in April, which reduced the rate of new BTC issuance by 50%. As a result, miners are now competing for 3.125 BTC in rewards from each new Bitcoin block, down from the previous halving where rewards were 6.25 BTC.

Data from blockchain.com shows that the halving event impacted miners' revenue. On the day of the halving, the Bitcoin hash rate peaked at 650 exahashes per second (EH/s) but has since declined 15% to 552 EH/s — signaling that many inefficient miners have been forced offline. Hash rate measures the combined computational power harnessed by miners competing to validate Bitcoin transactions.

Data from CryptoQuant, an on-chain analytics platform, reveals that miners' reserves fell to 1.81 million BTC from 1.84 million BTC a year ago. This decline marks the lowest level since July 2021 and the largest year-to-date drop in over a decade, suggesting that many miners are dipping into their savings to stay afloat.

Meanwhile, transaction fees on the Bitcoin network have also fallen sharply, further impacting miner revenues. In July, the average transaction fees (7-day moving average) dropped to $2.09 after trending between $4 and $20 throughout most of the year.