DCG successfully navigates through the crypto winter, with first-quarter revenue exceeding $200 million.

According to a report by CoinDesk, asset management company Grayscale's parent company DCG Digital Currency Group announced an 11% increase in revenue for the first quarter, reaching $229 million. Grayscale contributed $156 million, and despite the continuous outflow of funds from GBTC, its role as the group's cash cow remains unchanged.

Crypto Market Warms Up, DCG Reports 11% Revenue Growth in Q1

DCG announced an 11% revenue growth in the first quarter, reaching $2.29 billion, with $1.56 billion contributed by Grayscale. Despite a significant increase in the prices of Bitcoin and Ethereum and a large number of redemptions after the Grayscale Bitcoin Trust (GBTC) converted to an ETF, the revenue for this quarter remained relatively stable compared to the previous quarter. The revenue of DCG's other two subsidiaries - crypto mining pool Foundry and investment platform Luno - increased by 35% and 46%, respectively.

GBTC Market Value Halved, Seeking Survival by Applying for Bitcoin Mini Trust?

In January of this year, Grayscale's flagship fund GBTC successfully listed alongside ten other Bitcoin spot ETFs. GBTC transformed from the original fund to an ETF, but with a management fee as high as 1.5%, much higher than its competitors, it set a record of 78 consecutive days of net outflows. As of 5/8, Grayscale's GBTC has seen a cumulative outflow of $17.5 billion, with current net assets valued at $18.1 billion, nearly half of the funds have been withdrawn.

Although the company has stated that it will eventually reduce fees, it has not been implemented yet. Meanwhile, Grayscale applied for a mini version of the Grayscale Bitcoin spot ETF, Grayscale Bitcoin Mini Trust, BTC, in March. Grayscale plans to split one-tenth of GBTC's assets, and shares of the BTC trust will be automatically issued and distributed to GBTC shareholders. According to its current financial forecast, the proposed split version of the fund will charge a fee of 0.15%, lower than the current Bitcoin spot ETFs in the market. Currently, Franklin's EZBC has a fee rate of 0.19%, the lowest cost Bitcoin spot ETF on the market.

Grayscale's mini version "BTC" may reduce fees to 0.15%, challenging the lowest price in the market

DCG Survives by Cutting Tail, Weathering the Crypto Winter

As reported earlier, DCG lost $1.1 billion in 2022, reflecting not only the decline in crypto asset prices but also the impact of 3AC Capital's default on its subsidiary Genesis.

Genesis went through a year of bankruptcy liquidation, and after its crypto media company CoinDesk underwent significant layoffs, it was officially acquired by the cryptocurrency exchange Bullish led by former NYSE President Tom Farley at the end of last year, with a 100% all-cash transaction. DCG was able to retain its cash cow Grayscale, and despite a significant amount of fund sales, Grayscale's GBTC recently saw net inflows. It appears that DCG has successfully weathered the previous crypto winter.