The bitcoin mining exchange-traded fund (ETF) from the crypto asset management firm Valkyrie is slated to list on the Nasdaq stock exchange on February 8. The Valkyrie Bitcoin Miners ETF will invest 80 percent or more of its assets in companies that earn at least half their profits from bitcoin mining activity.
In a filing with the US Securities and Exchange Commission (SEC), Valkyrie CEO Leah Wald said: “An increased focus and desire to gain exposure to bitcoin miners from investors” prompted the company to apply on January 26 to the SEC to offer the ETF.
An
ETF is a pool of diverse securities that track a particular index, sector or any other asset. They are like mutual funds but with the exception that they can be bought and sold on a stock exchange.
Why is this a step forward for crypto ETFs and mining companies
Historically, only futures ETFs (an agreement to buy or sell shares of an ETF at an agreed-upon price in the future) have been allowed in the market as spot ETFs have not been approved by the SEC. This is a small but important step towards future institutional adoption of bitcoin and other cryptocurrencies.
This will also spotlight bitcoin cryptocurrency mining companies that have been slowly becoming more popular as the demand for crypto trading has also been increasing amongst the general public.
This could also be a floodgate for other spots ETFs. Valkyrie also has a smattering of spots ETFs waiting for approval from the SEC.
All about the Bitcoin Mining ETF
This ETF offers exposure to stocks of various bitcoin mining companies already listed on the
Nasdaq but with benefits of ETF investing.
Here is all you need to know about the ETF
The ETF will be listed on the Nasdaq exchange under the 'WGMI' ticker.
The fund will have 80 percent exposure to mining companies that derive at least 50 percent of their profits from either bitcoin mining or related activities.
The balance portion of the ETF will be directed towards companies with substantial cryptocurrency holding in their balance sheets.
The ETFs expense ratio will be 0.75 percent, which means that for every $100 of the ETF securities bought by traders, 75 cents will go to Valkyrie, per a Coindesk report.
Some of the biggest mining company securities in the fund will be Argo Blockchain (ARBK), Bitfarms (BITF), Cleanspark (CLSK), Hive Blockchain (HIVE) and Stronghold Digital Mining (SDIG). Their allocation within the fund will range from 8 to 10 percent.
Valkyrie has also stated that the mining operations in the fund's portfolio utilise around 77 percent renewable energy to alleviate investors’ concerns about mining's environmental impact.Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ), and the Bitwise Crypto Industry Innovators ETF (BITQ) are among other US-listed ETFs that have exposure to crypto mining companies. The steep decline in bitcoin prices in recent weeks had weighed on the performance of these ETFs. However, with bitcoin now rising back above $44,000, the ETFs are gathering steam.
Bitcoin mining has been a hot-button issue for lawmakers and individuals concerned about the carbon footprint the activity leaves. To their credit, bitcoin mining companies have been slowly transitioning to the use of renewable sources of energy. A recent report from the Bitcoin Mining Council (BMC) showed that bitcoin mining is steadily adopting a sustainable model for power usage.
Founder and CEO of MicroStrategy, Michael Saylor, a key member of the BMC, said, "This quarter we saw the trend continue with dramatic improvements to Bitcoin mining energy efficiency & sustainability due to advances in semiconductor technology, the rapid expansion of North American mining, the China Exodus, and worldwide rotation toward sustainable energy and modern mining techniques.”
(Edited by : Aditi Gautam)
