"The institutions are coming" has been a longstanding mantra repeated by cryptocurrency investors through previous market cycles. But this time the institutions are actually here, and many of them are investing in mining companies.
Despite disparaging and cynical comments from prominent talking heads in legacy finance, an army of traditional financial institutions are among the top holders of public mining companies. So no matter how many times J.P. Morgan CEO Jamie Dimon says bitcoin is “worthless,” his competitors' portfolios preach a different message.
This article breaks down the top 10 institutional holders for the following public mining companies:
- Riot Blockchain (RIOT)
- Marathon Digital Holdings (MARA)
- Bitfarms (BITF)
- Hut8 Mining (HUT)
- CleanSpark (CLSK)
- Hive Blockchain (HIVE)
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So, who is buying shares of mining companies?
Institutional mining investors
The below chart shows the top ten institutional holders of each mining company.
These shareholders are large asset management firms, investment banks, financial services companies, and hedge funds like Morgan Stanley, Jane Street, Blackrock, and Goldman Sachs. Morgan Stanley, for example, owns shares in Marathon, Riot and CleanSpark.
The below table shows institutional holdings for Hut 8, Hive, and CleakSpark.
Notice that Vanguard and Blackrock are the top two holders in Riot, Marathon, and CleanSpark. Vanguard is typically conservative in their investment selection process, their investments in these mining companies is very telling. Not only are they bullish on the industry, they also find it safe enough to include in their investment funds.
This investor data can be broken down further to look at the top five institutional holders among all these companies.
Blackrock and Vanguard, two of the largest investment managers in the world, take the top spots among institutional mining investors.
Comparing institutional ownership
Institutional ownership as a percentage of total investors for public mining companies is far equally distributed. But the ranking does track with the general market capitalization rankings for mining companies. And the percentage of institutional ownership for some mining companies suggests that institutions are rather bullish on bitcoin mining as an economic sector.
Institutions account for over 25% of ownership in RIOT, MARA, and CLSK. Most financial institutions, investment management companies in particular, are subject to strict mandates regarding what they are allowed to include in client portfolios. Based on the data above, it is reasonable to assume that these institutions are using bitcoin companies to meet clients' demand for bitcoin exposure.
Active positions of institutional holders in these stocks, moreover, experienced a net increase over the past year. Institutions are not selling their mining investments, they are adding to their positions.
The bottom line
Many CEOs, investment advisors, and legacy financial representatives have publicly declared bitcoin useless, worthless, and destined to fail. But many portfolios of traditional investment firms show institutional interest in bitcoin (specifically, in bitcoin mining) continues to grow.
To many institutions, bitcoin is far from worthless. And for some of the world's largest institutional investors, holding shares of bitcoin mining companies has been quite profitable. Bitcoin naysayers meanwhile can have fun staying poor.