With the success of the first US over-the-counter Bitcoin trading platform trading fund (ETF) appearing to be in sight, the entire cryptocurrency industry is optimistic about how such a product can enhance the legitimacy of Bitcoin in the investment community, drive institutional adoption, and raise Bitcoin prices to the sky, including Bitcoin mining companies.With the imminent launch of the first US over-the-counter Bitcoin trading platform trading fund (ETF), the entire cryptocurrency industry is optimistic about this product, indicating confidence in how it can enhance the legitimacy of Bitcoin in the investment community, drive institutional adoption, and push Bitcoin prices to new highs
With the success of the first US over-the-counter Bitcoin trading platform trading fund (ETF) appearing to be in sight, the entire cryptocurrency industry is optimistic about how such a product can enhance the legitimacy of Bitcoin in the investment community, drive institutional adoption, and raise Bitcoin prices to the sky, including Bitcoin mining companies.
With the imminent launch of the first US over-the-counter Bitcoin trading platform trading fund (ETF), the entire cryptocurrency industry is optimistic about this product, indicating confidence in how it can enhance the legitimacy of Bitcoin in the investment community, drive institutional adoption, and push Bitcoin prices to new highs.
To a large extent, this includes Bitcoin mining companies - these companies run large computer clusters specifically designed to protect Bitcoin networks and acquire newly minted Bitcoins.However, a key fact in the current Bitcoin investment field may cause some concern for investors in mining companies.
We are optimistic about ETFs and there are signs that they will have a positive impact, "Isaac Holyoak, Chief Media Officer of CleanSpark, told Decrypt. He pointed out that during bullish periods, mining stocks often inherit the positive momentum of Bitcoin.
Although Bitcoin itself has risen this year, the returns on publicly listed mining stocks are even higher - just like other companies related to Bitcoin. In the absence of ETFs, these companies have been selected as regulated and more traditional leveraged investments in Bitcoin.
However, there is a problem with this: although Bitcoin ETFs may seem promising, they may also suck up funds from stocks that investors have so far considered the next best choice.
As for CleanSpark, the company remains optimistic and focuses on the price of Bitcoin. Recent developments, including false claims about ETFs and hints of CUSIP listing, have driven up the price of Bitcoin, "Holoyak emphasized.
Due to the fact that most of the revenue of mining companies comes from fixed Bitcoin block rewards, the rise in Bitcoin prices will bring higher dollar denominated revenue to the entire industry.
In order to gain maximum competitive advantage, CleanSpark expects future price increases and has invested millions of dollars this year to purchase mining equipment.
In the October mining industry report shared with Decrypt, J.P. Morgan's equity analyst Reginald L. Smith marked CleanSpark (CLSK) as a super rights issue, thanks to its acquisition of hardware and facilities at a "significant discount price" and efficient computer operations. CLSK has risen by 122% so far this year.
Another company that has made significant infrastructure investments this year is IrisEnergy (IREN), a mining company focused on renewable energy, optimistic about the upcoming halving of Bitcoin. Smith also rated IrisEnergy's stock as' overmatched ', rising 161% this year.
Daniel Robert, co founder and co CEO of IrisEnergy, said, "Half reduction has historically involved additional price catalysts as Bitcoin has become more scarce. In addition, the macro monetary environment may relax in the next 6 to 12 months, and we may enter a period of high light for Bitcoin
Regarding ETFs, Roberts pointed out that the approval of the US Securities and Exchange Commission may bring a "large pool of funds" to the Bitcoin market, combined with the bullish effect of halving and macroeconomic easing.
On exchange Bitcoin trading platform trading funds are different from existing Bitcoin investment products in the United States because their shares can be directly exchanged for a fixed amount of Bitcoin held by providers and their partners.
Aydin Kilic, CEO of HIVEDigital, explained to Decrypt, "On the exchange trading platform trading funds are infinitely desirable for fund options in the current market. It will open up this asset class for professional investors and retail pension accounts
One of the main choices in the stock market today is the Grayscale Bitcoin Trust Fund (GBTC), which charges high fees and cannot accurately track the price of Bitcoin.
The stocks of this trust fund are currently trading at a discount, lower than the Bitcoin held by the fund. With people's efforts to transform the fund into an over-the-counter Bitcoin trading platform trading fund, it is expected to succeed, and this discount will gradually shrink upon approval. If approved, the discount will completely disappear.
Although some people may prefer to purchase and hold Bitcoin directly, many retail investors may be less willing to purchase Bitcoin from typically unregulated cryptocurrency dedicated platforms. Furthermore, as Iris' Roberts explained, it is completely impossible for many larger companies to directly invest in Bitcoin.
He pointed out that "investment regulations for institutional investors and general retail securities brokerage services often prohibit investing in customer capital outside of specific defined instruments and securities. Therefore, ETFs may be a way to address this issue
After GBTC, there are also some options, including the cryptocurrency trading platform Coinbase (COIN; up 120% YTD) and the futures based ProShares Bitcoin strategy ETF (BITO; up 64% YTD). However, in addition to this, there are more than a dozen listed mining companies that have performed well in Bitcoin.
In a recent podcast interview, J.P. Morgan's Smith specifically mentioned the two largest Bitcoin mining companies, MarthonDigital and RiotPlatforms, as less indirect Bitcoin investments than ETFs.
He explained, "Compared to purchasing Riot or Marathon, ETFs can participate more directly in the Bitcoin market, avoiding issues such as computing power and downtime
He added, "ETFs may also introduce a whole new area of arbitrage opportunities, perhaps buying Bitcoin directly and leveraging it is cheaper than indirectly buying through one of the mining companies
In terms of this dynamic, Bitcoin mining company and mining pool operator FoundryDigital acknowledge that ETFs may have a "counter intuitive negative impact" on the industry.
Alex Altman, Senior Manager of Enterprise Development and CFA Holder at Foundry, stated:In the past few years, mining companies have been used as an alternative to obtaining Bitcoin investments in the open market. It will be interesting to see how these new ETF tools will affect public miner valuations, as investors will now have a more direct and cost-effective way to acquire this asset class
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