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Controlling The Chaos: Alameda Ventures Bails Out Voyager With $200M & 15K BTC

Apparently, Voyager Digital is out of the woods. The company ran into liquidity issues when Three Arrows Capital failed to pay a huge loan to them. Welcome to another chapter of the crypto death spiral caused by the Terra/ Luna collapse. Who came to the rescue this time? Sam Bankman-Fried’s other company, Alameda Ventures. Is this man bailing out crypto or is he taking total control of the industry?

In a recent press release, Voyager Digital announced that it “entered into a definitive agreement with Alameda Ventures Ltd. related to the previously disclosed credit facility, which is intended to help Voyager meet customer liquidity needs during this dynamic period.” That’s a way to put it. The company received “US$200 million cash and USDC revolver and a 15,000 BTC revolver.”

This morning, we announced a definitive agreement with Alameda Ventures for a $200 million dollar cash / USDC revolver and a 15,000 BTC revolver.

Read today’s release: https://t.co/8wPfzcaI6K

— Voyager (@investvoyager) June 22, 2022

As a reminder, yesterday transpired that FTX, also owned by Bankman-Fried, bailed out BlockFi with $250M. At the time, we described the situation as follows:

“Over the last few weeks, the crypto market has been trending down. The contagion effect of the Terra/ Luna extinction event rocked every company out there, most of all those who offered yield on cryptocurrency deposits like BlockFi and Celsius and hedge funds like Three Arrows Capital. These companies’ problems and possible liquidation of assets, in turn, sent the crypto market into even more turmoil.”

The Voyager case fits right into that description.

Sam Bankman-Fried’s Loan To Voyager, The Conditions

The rumors were already flying. On June 16th, analyst Dylan LeClair tweeted “Speculation here, but in its quarterly report, Voyager had loaned $320m to a singapore based entity named “counterparty b”. One has to wonder whether “counterparty b” was 3AC and if so, how much of a hit Voyager took?” The answer came quicker than anyone thought. 

Speculation here, but in its quarterly report, Voyager had loaned $320m to a singapore based entity named "counterparty b".

One has to wonder whether "counterparty b" was 3AC and if so, how much of a hit Voyager took? $VOYG shares are down 33% over the last two days… pic.twitter.com/sCiYskwLEq

— Dylan LeClair 🟠 (@DylanLeClair_) June 16, 2022

In the press release, Voyager explained the loan:

“As previously disclosed, the proceeds of the credit facility are intended to be used to safeguard customer assets in light of current market volatility and only if such use is needed. In addition to this facility, as of June 20, 2022, Voyager has approximately US$152 million cash and owned crypto assets on hand, as well as approximately US$20 million of cash that is restricted for the purchase of USDC.”

The loan comes with “certain conditions,” among them:

  •  “No more than US$75 million may be drawn down over any rolling 30-day period.”
  • “The Company’s corporate debt must be limited to approximately 25 percent of customer assets on the platform, less US$500 million.” 
  • “Additional sources of funding must be secured within 12 months.” 

Voyager Digital price chart on OTC | Source: TradingView.com
It’s All About Three Arrows Capital Right Now

The press release confirms the rumors, the Singapore-based entity named “counterparty b” was 3AC. “Voyager concurrently announced that its operating subsidiary, Voyager Digital, LLC, may issue a notice of default to Three Arrows Capital (“3AC”) for failure to repay its loan.” In a recent article, our sister site Bitcoinist broke down the hedge fund’s situation:

“The crypto fund had been directly in the crosshairs of the Luna crash with exposure of more than $200 million and speculated to be as high as $450 million. At first, the firm had appeared to bounce back from the Luna collapse but it would be soon obvious that 3AC was in a more perilous position than investors thought.”

The Voyager situation makes it even more obvious. The company’s “exposure to 3AC consists of 15,250 BTC and $350 million USDC”. So, the Alameda loan covers most of it. What did they have to give in return, though? Formally, “Alameda currently indirectly holds 22,681,260 common shares of Voyager (“Common Shares”), representing approximately 11.56% of the outstanding Common and Variable Voting Shares”. If everything goes well, Voyager has nothing to worry about. But, what if it doesn’t?

Voyager levered 3AC up with 650million of their customers money, leaving them with only 150million cash reserves.

Who tf is in charge of risk over there, Merrill Lynch?

— Tyler (@ApeDurden) June 22, 2022

In any case, for those that like gossip, here’s the story as narrated by Voyager:

“The Company made an initial request for a repayment of $25 million USDC by June 24, 2022, and subsequently requested repayment of the entire balance of USDC and BTC by June 27, 2022. Neither of these amounts has been repaid, and failure by 3AC to repay either requested amount by these specified dates will constitute an event of default. Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors regarding the legal remedies available.”

Answers And Conclusions

The crypto industry as a whole is in a precarious situation. And there’s one question at the center of it, is Sam Bankman-Fried controlling the chaos or is he taking total control of the industry?

Featured Image by Sebastian Herrmann on Unsplash | Charts by TradingView

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New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate

China is back with a vengeance. The Cambridge Centre for Alternative Finance, or CCAF, collected data “spanning the period from September 2021 to January 2022” for their latest study. The headline is that, ban or no ban, the Asian country controls 21% of the Global Bitcoin mining hashrate. Since June 2021, here in NewsBTC, we’ve been wracking our brains trying to figure out why did China ban bitcoin mining. Maybe we were barking at the wrong tree the whole time. 

According to the CCAF’s numbers, unsurprisingly the “US has remained at the forefront of Bitcoin mining and extended its leading position (37.84%).” For their part, “China has re-emerged as a major mining hub (21.11%). Kazakhstan (13.22%), Canada (6.48%), and Russia (4.66%) have been relegated to more distant places.” Let’s see what else can we learn from the CCAF’s numbers.

Is China All The Way Back? How Did This Happen? 

As it turns out, the CCAF analysis uncovered numbers that “strongly suggest that significant underground mining activity has formed in the country”. Can we be sure that the explanation is real? And if it is, how did the underground China bitcoin mining industry surge so fast?

“Following the government ban in June 2021, reported hashrate for the entire country effectively plummeted to zero during the months of July and August. Yet reported hashrate suddenly surged back to 30.47 EH/s in September 2021, instantly catapulting China to second place globally in terms of installed mining capacity (22.29% of total market).”

The report wonders what happened, “a comeback of this magnitude within the period of one month would seem unlikely given physical constraints, as it takes time to find existing or build new non-traceable hosting facilities at that scale”. And theorizes that maybe the underground miners were using VPNs to hide their location and then, suddenly, decided that they were safe enough to stop hiding. Which seems unlikely.

BTC price chart for 05/18/2022 on Bitfinex | Source: BTC/USD on TradingView.com
Non-China Countries

Sadly but predictably, the study also found out that “the hashrate recovery has not been distributed evenly”. How did the non-China countries in the Top 5 do?

  • The United States “surpassed the rest of the world in terms of hashrate growth. This is evidenced by installed capacity surging from 42.74 EH/s (35.40%) in August 2021 to 70.97 EH/s (37.84%) in January 2022.”
  • In Kazakhstan, for their part, “Total hashrate continued to increase in September and peaked at 27.31 EH/s in October, until repeated power outages towards the end of last year, and a week-long internet shutdown earlier this year, forced miners to temporarily suspend operations.”
  • Surprisingly, “Russia on the other hand not only experienced a substantial drop in relative hashrate share from 11.23% in August 2021 to 4.66% in January 2022, but also a significant decline in total installed mining capacity contribution from 13.56 EH/s to 8.74 EH/s over the same period.”
  • Last but not least, “Canada experienced only a moderate increase in its hashrate from 11.54 EH/s in August 2021 to 12.15 EH/s in January 2022, which resulted in a loss in market share from 9.55% to 6.48% as total network hashrate was growing significantly faster. ”

The CCAF Spreads FUD

Of course, the Cambridge Centre for Alternative Finance couldn’t pass the opportunity to spread some unfounded rumors about bitcoin mining. This is what the CCAF said: 

“These geographic shifts in mining activities bring to the fore how relocations impact the overall sustainability of the network. For instance, recent research has suggested that the Chinese decision to ban Bitcoin mining has indeed worsened – rather than improved – Bitcoin’s environmental footprint.”

The CCAF is using this study’s findings, which basically says that they NOW believe what bitcoiners always said. That China was mostly using hydropower energy for bitcoin mining, and not coal. The fact is, as far as using green energy goes, bitcoin mining continues to be the cleanest industry in the world. 

Whenever we find intentional FUD spreading like this one right here, we have to check out who paid for the study. As it turns out, the numbers come directly from the Cambridge Digital Assets Programme. The CCAF host the CDAP “in collaboration with 16 prominent public and private institutions”. Among them, we find the International Monetary Fund (IMF), Mastercard, Visa, and the World Bank.

And right then, everything made sense.

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Malice Or Ignorance? The New York Times Keeps Printing Lies About Bitcoin Mining

The New York Times’ campaign against bitcoin rages on. Even though this time they had the perfect opportunity to write a balanced article, they didn’t. The author reports one positive bitcoin mining story after another, while keeping a snooty attitude and suggesting it’s all a PR move. The title summarizes the New York Times’ stance, “Bitcoin Miners Want to Recast Themselves as Eco-Friendly.”

Related Reading | Valkyrie Bitcoin Mining ETF “WGMI” Approved For Nasdaq Listing

Before we get into it, a quick story. The foremost expert in bitcoin’s energy consumption, Nic Carter, published an exhaustive report on mining. Among other things, it contained hard data that showed to what extent China was mining using hydropower energy. Mainstream media largely ignored it. The party line was that we couldn’t trust China’s statistics. And, that China was probably burning cole. 

Fast forward to last month. China banned bitcoin mining a while ago and bitcoin’s hashrate relocated, recovered, while the network functioned perfectly throughout. Most of China’s mining industry relocated to green energy-abundant countries. What did the New York Times post? An article called “China Banished Cryptocurrencies. Now, ‘Mining’ Is Even Dirtier,” that claims that Chinese miners were using hydropower energy and thus used cleaner energy.

That’s the level of propaganda we’re dealing with.

What Did The New York Times Say About Bitcoin Mining This Time?

The article starts by featuring Argo Blockchain, the company is building a new facility that “would be fueled mostly by wind and solar energy.” They even quote Peter Wall, Argo CEO, saying. “This is Bitcoin mining nirvana. You look off into the distance and you’ve got your renewable power.” What could be wrong with that?

Two paragraphs later, the New York Times starts pushing lies and embarrassing numbers: 

“A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to power the average American household for 73 days, researchers estimate.”

Of course, those ridiculous claims come from Digiconomist, a widely debunked researcher who happens to be an employee of the Dutch Central Bank. And then, they blatantly quote the malicious study mentioned in the intro. 

“The Bitcoin network’s use of green energy sources also dropped to an average of 25 percent in August 2021 from 42 percent in 2020. (The industry has argued that its average renewable use is closer to 60 percent.) That’s partly a result of China’s crackdown, which cut off a source of cheap hydropower.”

And quote Alex de Vries, one of the study’s authors, being completely off the mark. “What a miner is going to do if they want to maximize the profit is put their machine wherever it can run the entire day.” WHAT? To maximize profit, a miner is going to find the cheapest source of energy possible. Energy is their biggest cost. The cheapest source possible is energy that’s currently being wasted. That’s the situation.

BTC price chart for 03/26/2022 on Forex.com | Source: BTC/USD on TradingView.com
More Feel-Good Stories Framed As Bad News

The New York Times even quotes Paul Prager, TeraWulf CEO, saying “Everyone I talk to now is talking about carbon neutrality. The language has absolutely changed.” And then, the newspaper spreads the good news.

“TeraWulf, has pledged to run cryptocurrency mines using more than 90 percent zero-carbon energy. It has two projects in the works — a retired coal plant in upstate New York fueled by hydropower, and a nuclear-powered facility in Pennsylvania.”

None of these stories are celebrated. Remember the article’s title, they are cynically presented as PR stunts. Then, it´s time for Sangha Systems, who “repurposed an old steel mill in the town of Hennepin. Sangha is run by a former lawyer, Spencer Marr, who says he founded the company to promote clean energy. But about half the Hennepin operation’s power comes from fossil fuels.”

The New York Times Closes The Loop

That’s the worst example that the New York Times could find. A person who “founded the company to promote clean energy” but had to make a compromise to start his business. To close the article, the author brings us back to Argo Blockchain and tries to pull something similar. Apparently, the CEO “can’t guarantee that Argo’s new center will have no carbon footprint. That would require bypassing the grid and buying energy directly from a renewable power company.”

Related Reading | Biden Loves Intel’s Plan To Produce Semiconductors. What About Bitcoin Mining?

And then, they quote him again. “A lot of those renewable energy producers are still a little bit skeptical of cryptocurrency. The crypto miners don’t have the credit profiles to sign 10- or 15-year deals.”

So, Argo is really trying but it’s not possible at the moment for understandable reasons. And the whole industry is moving to a greener path because the incentives are aligned that way. Got it, New York Times. Got it.

Featured Image by tacskooo on Pixabay | Charts by TradingView

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Goodbye, Russia – A Number Of Goldman Sachs Employees Are Leaving Russia To UAE

Goldman Sachs is relocating some of its Moscow-based staff to the United Arab Emirates as a result of Russia’s onslaught on Ukraine, numerous news agencies reported Sunday.

The Wall Street behemoth is sending some of its employees to Dubai, a key financial hub in the Middle East, as foreign corporations reevaluate their Russian operations as the Ukraine crisis enters its second week.

The Goldman Sachs Group, Inc. is a New York City-based international investment bank and financial services company.

Goldman Sachs employs over 40,500 people and had total assets of approximately $1.2 trillion as of 2021.

Related Article | Billionaire Investor Says Crypto Outlook Is ‘Very Bullish’ For Bitcoin

Urging Goldman Sachs To Abandon Russia

Georgy Egorov, a former Goldman Sachs banker, published an open letter to the company’s Chief Executive Officer David Solomon this week, urging the bank to exit Russia and shift workers in order to be “on the right side of history.”

Egorov, who was born in Russia, suggested that Goldman should suspend all operations in Russia “as a show of defiance” and join international sanctions against what he described as a “criminal regime.”

Russia has been slapped with heavy international sanctions that have thrown its economy into a tailspin – the outcome of a coordinated global effort to isolate Moscow in the aftermath of President Vladimir Putin’s invasion of Ukraine.

British MPs Pressure Banks To Halt Russian Operations

As a result of this development, British members of parliament are also pressing large banks to terminate their Moscow services, after campaigners accused them of “quietly benefitting” from their Russian activities while other industries  are distancing themselves from the country.

Several of Moscow’s largest lenders, including HSBC, JP Morgan, Deutsche Bank, and Credit Suisse employ thousands of people to provide banking services to large firms and wealthy clients conducting business in Russia.

BTC total market cap at $723.85 billion on the daily chart | Source: TradingView.com

Goldman Sachs Asset Management reduced its exposure to Russia in its GQG foreign equities fund to around $222 million earlier this week, down from more than $1.7 billion six months ago.

On Monday, Netflix, American Express, and two leading accounting companies suspended connections with Russia in response to its atrocities in Ukraine.

Russia-Friendly Dubai

Dubai is regarded as one of the few flourishing cities in the world with a government that is friendly to Russia.

The UAE abstained from a United Nations Security Council resolution condemning Moscow’s invasion of Ukraine at the end of last month.

Related Article | Bitcoin Falls Back To $38,000 As Russia Steps Up Bombardment Of Ukraine

Goldman Sachs Bullish On Bitcoin

According to Goldman Sachs, Bitcoin currently holds a 20% share of the “store of value” market.

With gold reaching a critical level of $2,000 per ounce on Monday, Goldman Sachs analyst Zach Pandl believes Bitcoin has the ability to surpass the $100,000 mark in the coming years.

Bitcoin was priced at $38,181.82 on Monday, according to Coingecko’s monitoring. In the last 24 hours, the cryptocurrency has lost 3.5%.

Featured image from ODDS.com, chart from TradingView.com