Institutional investment fuels crypto mining in the U.S.

digitized wall street bull and bear

Date Published

10/13/2021

There are a number of recent factors already contributing to the potential growth of crypto mining in the U.S., including Chinese mining bans that have left a massive portion of global bitcoin miners without a home in a time of renewable energy expansion in North America.

These factors have combined to make the U.S. an ideal landing spot for many miners in need of hosting space and cost-effective power to fuel their operations.

Now, recent institutional investment in publicly traded mining companies is serving to further fuel the growth of crypto stateside, as more and more firms begin to dip their toes into the ever-evolving digital landscape.

Here is a look at the recent uptick in institutional investment in crypto and the benefits for funds and family offices looking to make their way into the space.

Fidelity buys stake in MARA

Marathon Digital Holdings (MARA) saw its stock jump 27% in the days following an August 4th announcement that Fidelity had bought a 7.4% stake in the company – a purchase amounting to approximately $20 million.

Marathon Digital is one of the largest bitcoin mining operations in North America, making the buy-in a particularly noteworthy development for other publicly traded crypto names and for the industry as a whole. The purchase represents a growing trend among institutions and individual investors for gaining exposure to crypto through traditional equity or debt securities.

MARA trades very similar to the price of bitcoin, allowing Fidelity’s funds to effectively gain access to bitcoin without having to directly own any amount of the asset.

line graph of marathon digital holdings inc price and bitcoin price in 2020 and 2021

Vanguard, Susquehanna, and Blackrock have all bought into MARA in the past. Fidelity is just the latest to do so – but its involvement should not come as much of a surprise. As far as institutional investors go, Fidelity has been on the leading edge of crypto for a while now, even having launched Fidelity Digital Assets as a standalone outfit in 2018 as a means of offering hedge funds and family offices an enterprise-quality custody and trade execution of digital assets and crypto.

Benefits of crypto for institutional investors

As big-name investment in crypto continues to ramp up, the advantages of doing so become all the more relevant. Here are some of the main reasons why family offices and UHNWIs should consider adding crypto to their investment portfolio.

Diversification

Building your portfolio with a strategic blend of asset classes is one of the best ways to optimize risk/reward opportunities, and digital assets represent an ideal alternative vehicle. This is especially true when considering crypto’s correlation coefficient being so close to 0 compared with traditional asset classes.

Advantage over gold and fiat currency

Long seen as the go-to safe haven hedge against risk and volatility, gold has been usurped by bitcoin and crypto in many circles due to a number of distinct differences. Crypto is portable, has the same value everywhere in the world, and is highly divisible, while gold’s archaic properties share none of these advantages. Crypto is also an anti-inflationary asset immune to the value-reducing effects of money-printing on fiat currency.

Asymmetrical risk

In traditional investing, more risk generally means more chance of losing your investment, while less risk means less chance of doing the same. This is not quite the case with crypto, where investment is only limited to the total loss while exponential yields of up to 20, 50, and even 100 times are far from out of the question. This limited downside and theoretically unlimited upside make crypto an attractive vehicle for even low-risk portfolios.

Strengthen your portfolio with Compute North

As digital assets and blockchain continue to expand into the world of mainstream investing, a growing number of firms continue to stake their claim to the future of this revolutionary technology – while growing their portfolios in the process.

In addition to helping miners and investors achieve high-performance capability at an affordable cost through our TIER 0™ data centers, Compute North also helps family offices and UHNWIs enter the crypto space smoothly and successfully. Our data centers are designed specifically to support non-mission critical applications in blockchain, machine learning, AI, IoT, and more. We help you get online quickly and make sure you maintain flexibility to grow and expand as you need to in the future.

Benefits of our ASIC and GPU miner hosting services include:

  • Cost-competitive infrastructure powered by renewable energy
  • Secure environment to keep your hardware and your data safe
  • Core infrastructure with power, space, ambient air cooling, internet access, physical racks, and security
  • And more

Contact us to learn more.

Date Published

10/13/2021

Author

First Scribe

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