DCG spins out new 'self-mining' subsidiary, Fortitude Mining, from Foundry bitcoin mining unit

Digital Currency Group, the conglomerate sometimes referred to as the Standard Oil of Crypto, is spinning out a new mining subsidiary, according to an announcement on Wednesday. 

Fortitude Mining will be a wholly-owned unit of DCG focused on “achieving strong returns by mining Bitcoin and other high-growth digital assets in emerging ecosystems with attractive return profiles.”

The subsidiary started out as a semi-independent part of DCG’s first mining effort, Foundry, and focused on “self mining” over the past five years. Andrea Childs, the former senior vice president of operations and marketing at Foundry, will lead the firm, while Mike Colyer will remain CEO of Foundry.

“Fortitude Mining is the next step in DCG’s long-term investment in the crypto mining ecosystem. After five years of operating a successful self-mining division within Foundry, we saw an opportunity to expand its potential with a venture mining approach, diversifying beyond Bitcoin into emerging proof-of-work assets with high long-term growth potential," Barry Silbert, founder and CEO of DCG, told The Block in a statement. "Launching Fortitude now marks an exciting moment for the industry, and we are already seeing investor enthusiasm for the diversified exposure to digital assets that venture mining offers."

Self-mining, sometimes called solo mining, is the process of mining tokens using personal gear. It is a proportionally small part of the BTC mining sector, which has become a highly competitive and capital-intensive industry. There are over 20 publicly-traded mining companies in North America alone, for instance. 

That said, there are numerous proof-of-work chains designed to make it easier for individual miners to operate as well as many startups looking to make it cost-effective to mine bitcoin at home, like Solo Satoshi or Compass Mining. 

DCG investors first learned about the Fortitude spinout in a shareholder letter late last year, which said the new firm would absorb some Foundry executives and intended to raise fresh capital, Blockspace Media reported at the time. In December, Foundry cut its workforce mining pool business by about 27%, from 274 to 200 employees, to focus efforts on its mining pool business. 

According to the shareholder letter, Foundry’s self-mining business line was on target to hit $80 million in 2024 revenue. Fortitude will look to reinvest these revenues over the next year, including in new mining machines and site acquisitions. 

Foundry, founded in 2019 and based in Rochester, New York, is currently the largest bitcoin mining pool, with over 30% of the total network hashrate. Its next largest competitor, AntPool, represents about 18%. DCG, founded in 2013, has investments across the crypto industry and is the sole owner of several subsidiaries including lending firm Genesis, crypto exchange Luno and asset manager Grayscale, which operates the multi-billion dollar Grayscale Bitcoin Trust.