BlackRock ETF: $384 million invested in bitcoin mining
BlackRock ETF: $384 million invested in bitcoin mining
Bitcoin

BlackRock ETF: $384 million invested in bitcoin mining

By Stefania Stimolo - 20 Aug 2021

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BlackRock ETFs have substantially entered bitcoin mining with a stake in Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT), with a total value of nearly $384 million. 

According to reports from Forbes, it appears that BlackRock, the New York-based global investment giant, wants to invest in the world of bitcoin mining.

And in fact, the document filed last June 30 with the U.S. Securities and Exchange Commission (SEC) reveals that BlackRock ETFs hold a 6.71 percent stake in Marathon Digital Holdings (MARA) and a 6.61 percent stake in Riot Blockchain (RIOT). 

That represents an investment of $207 million on MARA shares and $176 million on RIOT shares.

Blackrock in the cryptocurrency world

Besides, it is not new that BlackRock is interested in the cryptocurrency world. Last April 2021, the multinational company’s purchase of 37 bitcoin futures contracts from the CME or Chicago Mercantile Exchange was made official through an SEC document.

Specifically, these were the CME Bitcoin FUT MAR21 XCME 20210326, which expired on March 26, 2021. From what had emerged, the investment amounted to $6.5 million, which is at an average price of about $35,000 per BTC, while the value at their expiration was about $9.8 million.

BlackRock ETFs and bitcoin mining

Among Blackrock’s hundreds of hedge funds and ETFs, its iShares Russell 2000 Index ETF and its iShares Expanded Tech-Software Sector own the shares of cryptocurrency-mining companies. Specifically, it is BlackRock’s iShares Russell 2000 ETF that holds more shares of MARA and RIOT than any other ETF. 

BlackRock’s new choice to participate in a bitcoin mining company is one of the latest significant trends for traditional financial institutions to want exposure in cryptocurrency by focusing on U.S.-based miners. 

Among the many reasons, surely there is the fact that revenues from bitcoin mining have grown significantly in the last three weeks. We are talking about profits more than doubled, going from $0.17 per day per THash/s on July 27 to over $0.4 in mid-August.

That happened undoubtedly due to the increase in the price of BTC and the related premium for miners if quantified in $, and also thanks to the adjustment of the algorithm to the difficulty of mining dropped to its lowest peak of the year.

An adjustment also sees the two companies chosen by BlackRock benefit enormously, especially considering the elimination of competitors on Chinese territory (due to the restrictive ban in China this year).

The support of big investors wants to reward cryptocurrency miners from other countries, just like BlackRock’s ETF that chose to invest in the shares of Marathon, based in Las Vegas, Nevada, and Riot based near Denver, Colorado.

The Bitcoin ETF issue in the U.S.

Staying in the U.S. territory, another issue is related to Bitcoin ETFs, i.e., those directly linked to the cryptocurrency asset.

In fact, the SEC continues to delay all applications for approval of bitcoin ETFs for at least two years.

Among the cases is Wisdom Tree’s application, which was originally filed with the SEC on March 26 but postponed several times, most recently last month.

The justification for the continued postponement is always to want additional comments, especially on ensuring that an ETF on bitcoin could not be susceptible to manipulation or how applicants can prevent fraudulent acts.

Despite this, applications continue to come across the SEC table, and for some cryptocurrency players, approval has become only a matter of time. Brian Armstrong, CEO of Coinbase, specifically stated that given the continued interest of institutional investors in bitcoin, the SEC could begin approving them as early as the end of this 2021. 

 

Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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