Foundry Digital’s parent company, Digital Currency Group (DCG), is splitting Foundry’s mining business into two separate entities, according to a private DCG shareholder letter shared with Blockspace and four sources close to the matter.
Foundry acknowledged the spin-out in a statement issued to Blockspace on December 3. Blockspace has since learned the name of the new mining entity and its purpose.
The new entity, Fortitude Mining, consists of Foundry’s former self-mining operations and physical infrastructure, while Foundry will retain its pool operations and other bitcoin mining service business lines.
“In support of Foundry’s trajectory, we are making some adjustments to the business to position it for future growth,” the Q3 shareholder letter reads. “We believe [Fortitude] will be stronger as a standalone business, and so we are spinning it out as a wholly-owned DCG subsidiary. We are bringing some of Foundry’s leadership into this new DCG subsidiary and making external hires with the intent to raise capital.”
Public records from the Delaware Department of State show that an entity named Fortitude Mining, LLC was formed on June 18, 2024. Two sources confirmed that Fortitude Mining LLC is the name of the new entity, and that Fortitude has started requesting hosting providers to bill invoices to the new entity for at least a month.
The news comes on the heels of company-wide layoffs at Foundry, where the company reduced its headcount from 274 to 200 employees, according to CEO Mike Colyer. In a statement issued to Blockspace last week, Foundry said it slashed jobs to focus on its mining pool business and to support “the development of DCG’s newest subsidiaries, including Yuma and the spinout of Foundry’s successful self-mining business.”
Foundry’s self-mining business on track to earn $80 million in 2024
DCG and Foundry intend to announce the news in the New Year, multiple sources told Blockspace. As noted in its shareholder letter, DCG plans to raise capital for Fortitude, but whether or not it intends to take Fortitude public – as over 20 North American mining companies have done since 2020 – remains to be seen.
According to DCG’s Q3 shareholder letter, Foundry’s self-mining business line is forecasted to rake in $80 million in 2024, a figure that puts it in the same league as public miners like Hive and Bit Digital. The letter also states that Foundry’s total Q3 revenue was $35 million.
Notably, DCG noted in its shareholder letter that it omitted Foundry’s pool luck – an industry term for variance in revenue caused by fluctuations in how many blocks a pool mines – from its financial summary.
“As such, the following discussion will not reflect the positive $10 million of revenue and EBITDA generated by pool luck in Q3 2024, negative $44 million in Q2 2024, positive $18 million in Q3 2023, negative $27 million YTD 2024, and positive $30 million YTD 2023,” the letter reads.
Sources said that Fortitude is actively hunting for a CEO, adding that Foundry Vice President Andrea Childs is taking the helm during the transition. The DCG shareholder letter states that Colyer will continue on as Foundry’s CEO.
Foundry and DCG did not respond to Blockspace’s questions or provide comment.
