5 months ago
Bitcoin miners are a fundamental component of the Bitcoin network, and provide diversified exposure to the bitcoin ecosystem. The CoinShares Valkyrie Bitcoin Miners ETF (WGMI) offers exposure to miners and generated notable performance in recent months.
Bitcoin miners settle transactions and provide verification across the blockchain. Mining rigs, built specifically for bitcoin mining, run specialized software to solve complex numerical puzzles in order to create a new block on the blockchain. When they win the block, they’re paid in bitcoin (BTC), which has a limited supply. In addition, they process transactions on the network, earning fees paid by those transacting. As supply narrows, fees will drive an increasing portion of miner revenues.
Burgeoning demand for bitcoin in the last decade resulted in growing competition amongst miners. In their current iteration, BTC mining companies have evolved to an industrial level. Individual facilities currently house tens of thousands of mining rigs. “Under the hood, these companies are really professional datacenter businesses,” said Matthew Kimmell, digital asset analyst at CoinShares, in a recent due diligence session hosted on the VettaFi platform.
Bitcoin miners stand to benefit from a number of factors, including growing bitcoin demand, rising bitcoin prices, and increasing datacenter demands according to Kimmell. This means they offer differentiated performance potential compared to investing in bitcoin itself. By adding exposure to miners, crypto investors can add valuable diversification.
“When we think about a technology ETF, there are certainly options to invest into technology ETFs where it might just be semiconductors,” Calvin Tintle, senior manager of national accounts and distribution at CoinShares, explained. However, most funds take a broader, more diversified approach to capturing the ecosystem around semiconductors, or any technology. Bitcoin miner ETFs like WGMI function in this way. “If you own a spot bitcoin ETF, and you think about the overall ecosystem, bitcoin mining companies are a natural progression.”
Diversify Your Bitcoin Investments With Miners
The CoinShares Valkyrie Bitcoin Miners ETF (WGMI) offers pure-play exposure to bitcoin miner companies in North America. WGMI invests in those companies earning at least half their profits or revenue from bitcoin mining. The fund invests in companies providing hardware, software or services to bitcoin mining companies. Additionally, the strategy seeks companies that manufacture specialized chips used in bitcoin mining. WGMI does not invest in bitcoin.
The fund is managed by a team of industry experts on both cryptocurrencies as well as the finance sector. The portfolio is built using the fund manager’s expertise of the technical, operational, and commercial workings of the bitcoin mining industry.
WGMI carries an expense ratio of 0.75%.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
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