BlackRock, the world’s largest asset manager with $9 trillion under management, started investing in bitcoin mining through the acquisition of shares in companies in the industry.
In a report sent to the US Securities and Exchange Commission (SEC) in late July released by Forbes, the company said it has $206 million invested in Marathon Digital Holdings shares and $176 million in the Riot Blockchain.
These investments are distributed across several BlackRock mutual funds and ETFs, such as iShares Russell 2000 and iShares Expanded Tech-Software Sector.
The total of US$382 million invested in bitcoin miners guaranteed BlackRock a 6.71% stake in Marathon and 6.61% in Riot. As a result, the manager became the second largest shareholder of both mining companies, behind only the Vanguard Group.
Buying shares of companies listed on the stock exchange has become a way for large traditional market players to gain exposure to the cryptocurrency industry without directly buying assets.
Fidelity Investments, one of the largest financial institutions in the world, acquired in early August a 7.4% stake in Marathon Digital Holdings, equivalent to US$20 million in shares.
The strategy also proved more profitable, at least in the performance of the last 12 months of the market-leading cryptocurrency. While bitcoin appreciated 221% in the year, shares of Marathon and Riot rose in the same period 754% and 848%, respectively.
The rally came as US-based miners saw their revenues rise in recent months thanks to falling competition. Many Chinese miners have had to shut down their machines and relocate operations in other countries after a wave of repression by the Chinese government.
Marathon seized the momentum to grow and, earlier this month, ordered 30,000 machines with the plan to represent 12% of the total bitcoin hash rate next year.
BlackRock and the crypto market
Although BlackRock is somewhat restrained about direct bitcoin investment, the manager has shown interest in the crypto market lately. In late 2020, BlackRock CIO Rick Rieder championed BTC as a possible replacement for gold and as a technology that is “here to stay”.
As early as January this year, the manager reported to the SEC that it would start trading bitcoin futures in its funds. A few months later, BlackRock confirmed that it held 37 currency futures contracts worth $360,000 on the Chicago Mercantile Exchange (CME).