Global investment manager VanEck has made efforts towards launching an EFT within the cryptocurrency mining world. When it filed its request at the Securities and Exchange Commission (SEC), VanEck made its intentions very clear.
In their disclosure, the ETF aims to keep a record of the MVIS Global Digital Asset Mining Index. VanEck Digital Asset Mining Index, which is the name of the ETF, will track prices and measure the performance. The index focuses on companies making not less than a half of their revenue from the mining of digital assets, or mining-affiliated technology.
The fund group was also quick to clarify that it would not directly invest in digital assets. This comes after the SEC rejected another VanEck ETF. The Bitcoin ETF was rejected even before the expiry of the 240-day review period, on grounds of direct investment on digital assets.
Despite this, VanEck still launched a product. It would be expected that the company would take a non-futures approach, given that Jan van Eck , VanEck’s CEO stated “a non-futures ETF structure is the superior approach.” But, the firm launched a product based on Bitcoin futures, dubbed VanEck Bitcoin Strategy ETF (XBTF).
XBTF is famous for its enormous holding estimated at $11 million after trading for only two weeks. It seems to be giving its predecessors a run for their money. VanEck’s biggest ETF is the Gold Miners ETF (GDX), which manages almost $14 billion assets. Then there’s the Proshares Bitcoin Strategy ETF (BITO). BITO, which was the first product of its kind to launch in the US, managing over $1 billion-worth of assets.
What Is the Potential of the Vaneck Digital Mining ETF
One can only hope for a similar trajectory for the VanEck ETF, but it will be challenging for the product to get there. At the moment, the market is flooded with dozens of cryptocurrency offerings. These offerings also make investments from blockchain companies through their equity securities.
Among these competitor funds is the Transformational Data Sharing ETF (BLOK) from Amplify Investments. This which first came to life in 2018 fund stands at a whopping $1.7 billion. According to data from ETF.com, it also hosts major crypto miners like HIVE Blockchain Technologies Riot Blockchain Bitfarms
Other key ETF offerings for bitcoin miners include the Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) from Viridi Funds. It manages $20 million-worth assets. There’s also Crypto Industry Innovators ETF (BITQ) from Bitwise Asset Management with $130 million assets.
“When gold does well, gold miners act as leveraged plays on the metal, and at that time we just see a lot of interest from investors in gold mining ETFs too because of the performance.” These were the words Neena Mishra who is director of ETF at Zacks Investment Research when talking about blockchain ETFs.
It is likely that blockchain ETFs will remain more relevant because crypto investors keep increasing their need for exposure to crypto assets.