On July 30, Situational Awareness, the hedge fund of former OpenAI researcher Leopold Ashenbrenner, urgently sold the majority of its portfolio of public stocks. CNBC reports this citing sources.
Shares of bitcoin miners, which the structure held according to reporting data as of March 31, rose by 18-30% at the end of the last trading session.
Ashenbrenner's Picks and Shovels
A Deal Overnight
The buyer of the Situational Awareness portfolio was Ken Griffin's Citadel, which agreed to purchase the package at a discount. According to Financial Times, it outbid competing offers from Millennium Management and Jane Street. Bloomberg clarified that both companies examined these assets but did not participate in the final transaction. Goldman Sachs, JPMorgan Chase, Bank of America, and Citigroup helped organize the transaction, Reuters sources stated.
The deal was prepared in less than 24 hours. Discussions began on Wednesday evening, and by Thursday morning the parties had agreed on terms. By that time, the fund was already looking for a single buyer for the entire package—selling the securities piecemeal on a falling market would have hurt its own positions. Ashenbrenner offered competitors to buy out shares worth more than $10 billion, writes The New York Times. According to the publication's estimate, the entire crisis unfolded over approximately a day and a half.
The full volume of the deal remains unknown. WSJ, Reuters, and FT reported on the main part of the portfolio without giving exact figures. According to WSJ's version, Citadel primarily took the positions purchased with borrowed funds, while some unleveraged assets might have remained with the fund. Situational Awareness's public investments prior to the transaction were estimated by FT at approximately $16 billion, calling it one of the largest on the American stock market.
After the agreement, the structure retained assets worth approximately $10 billion, including non-public investments. The NYT noted that Wall Street viewed the developments with caution: the previous episode of forced closure of a major player's positions—the collapse of Archegos in 2021—resulted in losses for Credit Suisse.
Leverage Worked in Reverse
Ashenbrenner's fund was hit by two blows simultaneously, CNBC sources emphasized. Investments in AI infrastructure were particularly hard hit: shares of Nebius Group, Sandisk, Micron, and CoreWeave fell by more than 35% by the end of July. The sell-off also affected other major positions—SK Hynix and Bloom Energy. At the same time, Situational Awareness was hurt by its short bets on software development companies, including Adobe.
The structure built up positions using borrowed funds, so the drop in share prices devalued the loan collateral. Prime brokers Bank of America, Goldman Sachs, and JPMorgan Chase demanded additional collateral. Reuters, however, noted: it is unknown whether the banks had time to send formal margin calls to the fund before the deal. Estimates of Situational Awareness's size vary. A CNBC source stated $45 billion at its peak in early July, while Bloomberg and FT cited a range of $20-24 billion before the main crash.
Only a few weeks passed between record returns and the sell-off. In a letter to investors dated July 24, Ashenbrenner reported that the fund earned 439% from January to June and 1551% since its launch. He acknowledged that the tech sector sell-off had affected his portfolio as well, but called it a favorable moment for purchases. He offered clients to make additional contributions starting August 1.
According to WSJ, by the end of July the loss had reached approximately 67%. In the same letter, Ashenbrenner linked the scale of the losses to the actions of short sellers working against Situational Awareness's positions.
Major non-public investments, including a stake in Anthropic, were not part of the agreement with Citadel, but the fund was considering selling them too. According to WSJ, management almost reached an agreement to sell the Claude developer's stake for approximately $3.5 billion to a consortium led by Greenoaks and Sequoia Capital, but the deal was canceled. A Situational Awareness representative told CNBC that reports about the sale of this stake were inaccurate.
Greenoaks and Sequoia Capital had already invested in Anthropic earlier. In May, the company raised $65 billion at a post-investment valuation of $965 billion—the round was led by Altimeter Capital, Dragoneer, Greenoaks, and Sequoia Capital. On June 1, the AI developer confidentially filed a draft registration statement on Form S-1 with the SEC. Ashenbrenner called this possible placement one of the key events of the second half of the year.
How This Affected Bitcoin Miner Stocks
At the end of trading on July 30, IREN rose the most—by 30.54%, to $38.26. Bitdeer gained 24.72%, Riot Platforms—21.27%, CleanSpark—21.07%, Core Scientific—20.36%, HIVE Digital—18.34%.
All six companies were listed in the fund's Form 13F reporting as of March 31:
- IREN — 11.7 million shares worth $401 million;
- Core Scientific — 26 million worth $389.1 million;
- Riot Platforms — 11.5 million worth $142.2 million;
- CleanSpark — 12.3 million worth $104.5 million;
- Bitdeer — 3.44 million worth $29.8 million;
- HIVE Digital — 3.39 million worth $6.4 million.
However, it is unknown whether the fund held these securities immediately before the sale.
IREN's quotes were also influenced by the company's own news. On July 20, the company announced new contracts for cloud AI services with a total value of $2.8 billion and raised its target annual AI Cloud revenue growth rate by the end of 2026 to over $4 billion. Among the clients, the miner's management highlighted Microsoft, NVIDIA, Perplexity, Figure AI, and other organizations.
Recall that in July, Alphabet recorded negative free cash flow for the first time due to massive investments in AI infrastructure.
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