How to profit from greener bitcoin miners

New York CNN Business —  

The Securities and Exchange Commission still hasn’t approved a single bitcoin exchange-traded fund even though several top firms have applied. But investors looking for cryptocurrency exposure through an ETF have another option: a new mining ETF that debuted Tuesday.

Investment firm Viridi Funds launched a fund that plans to focus on companies with ties to the business of mining bitcoin — the process of solving complex mathematical puzzles with fancy hardware to generate new bitcoins or other cryptocurrencies.

But there’s a twist.

Critics of crypto mining, including dogecoin fan and Tesla (TSLA) CEO Elon Musk, have slammed the practice for being bad for the environment because of the massive amount of energy consumed. Mining farms in China have been scrutinized in particular, and the Chinese government has since cracked down on the practice.

So the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF, which trades under the ticker symbol of RIGZ, will primarily own North American mining companies and other tech firms with ties to cryptocurrencies that aren’t using as much electricity.

“The exodus of computing power from China is advantageous for other global and US-based miners,” said Wes Fulford, CEO of Viridi Funds.

Top holdings in the ETF include miners like American firms Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) as well as Canada’s Bitfarms and Hive Blockchain (HVBTF).

The fund also owns two semiconductor giants that make graphics processing chips that are essential for mining hardware: Nvidia (NVDA) and Advanced Micro Devices (AMD).

Fulford said that the ETF is not going to invest in companies that are merely buying bitcoin or other cryptos to hold on their balance sheets. He wants firms that are generating actual revenue from the business of bitcoin.

That means the fund does not own Tesla or MicroStrategy (MSTR), the software firm run by big crypto bull Michael Saylor, who helped convince Musk to change his stance on bitcoin a few months ago.

The timing of the ETF launch isn’t great. Bitcoin prices have plunged lately, falling below $30,000 from a peak of more than $60,000 just a few months ago. That’s hurt the prices of bitcoin miners as well as Coinbase, the crypto trading giant that went public earlier this year.

Fulford isn’t too concerned, however. He explained that because the fund is actively managed — not based on an index that may only update its holdings quarterly or monthly — he is planning to stay on top of crypto trends and act accordingly.

“We will make moves daily if needed,” he said. “The cryptocurrency market has been evolving at the speed of light.”

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