If you are interested in cryptocurrency and blockchain, you have probably heard of BlackRock, the world’s largest asset manager. BlackRock has been showing a growing interest and involvement in the crypto space, and has recently launched the first Bitcoin exchange-traded fund (ETF) in the US, called the iShares Bitcoin Trust (IBIT).
But what exactly is BlackRock, and why is it interested in crypto? What are the details and implications of its crypto portfolio and activities? And what does it mean for the future of crypto and the global economy?
In this article, we will answer these questions and more, by providing you with everything you need to know about BlackRock and its crypto portfolio. We will cover the following topics:
What is BlackRock and why is it interested in crypto?
How BlackRock launched the first Bitcoin ETF in the US
How BlackRock owns 5.53% of the largest Bitcoin holder
How BlackRock invested $384 million in Bitcoin mining
Conclusion: Why BlackRock is the ultimate crypto leader in 2024
Let’s get started!
What is BlackRock and Why is it Interested in Crypto?
BlackRock is the world’s largest asset manager, with over $9.5 trillion under management. It offers a range of products and services to institutional and individual investors, such as mutual funds, ETFs, index funds, portfolio management, risk management, and financial technology.
BlackRock has been showing interest in cryptocurrency and blockchain technology for the last few years, and has recently launched the first Bitcoin exchange-traded fund (ETF) in the US, called the iShares Bitcoin Trust (IBIT).
But why is BlackRock interested in crypto? There are several reasons for this, such as:
BlackRock sees crypto as a potential alternative asset class that can offer diversification, innovation, and returns to its clients and portfolio.
BlackRock believes that crypto and blockchain can transform the financial industry and create new opportunities for growth, efficiency, and inclusion.
BlackRock recognizes the increasing demand and adoption of crypto by institutional and retail investors, as well as by governments and corporations.
BlackRock’s interest in crypto is not just a passing fad or a speculative gamble. It is a strategic and long-term vision that reflects its mission to help its clients achieve their financial goals and to make a positive impact on society.
How BlackRock Launched the First Bitcoin ETF in the US
One of the most significant and recent achievements of BlackRock in the crypto space is the launch of the first Bitcoin exchange-traded fund (ETF) in the US, called the iShares Bitcoin Trust (IBIT).
An ETF is a type of investment fund that tracks the performance of an underlying asset or index, and can be traded on a stock exchange like a regular stock. A Bitcoin ETF is an ETF that tracks the price of Bitcoin, and allows investors to gain exposure to Bitcoin without having to buy, store, or manage the cryptocurrency themselves.
A Bitcoin ETF has been a long-awaited and highly anticipated product in the crypto industry, as it can offer several benefits, such as:
Lowering the barriers and risks of investing in Bitcoin, such as technical complexity, security issues, regulatory uncertainty, and high fees.
Increasing the liquidity and accessibility of Bitcoin, by making it available to a wider range of investors, such as institutional investors, retail investors, and financial advisors.
Enhancing the legitimacy and credibility of Bitcoin, by bringing it under the regulatory oversight and standards of the SEC and the stock market.
However, a Bitcoin ETF has also faced many challenges and obstacles, such as:
The lack of approval and support from the SEC, which has rejected or delayed several Bitcoin ETF proposals in the past, citing concerns over market manipulation, volatility, custody, and investor protection.
The competition and pressure from other countries, such as Canada and Brazil, which have already approved and launched several Bitcoin ETFs in their markets, attracting billions of dollars in assets and trading volume.
The emergence and popularity of other crypto products and platforms, such as Grayscale Bitcoin Trust (GBTC), Coinbase, and MicroStrategy, which have offered alternative ways for investors to access and invest in Bitcoin.
Despite these challenges and obstacles, BlackRock managed to launch the first Bitcoin ETF in the US, called the iShares Bitcoin Trust (IBIT), on January 18, 2024. How did BlackRock achieve this feat? Here are some of the key factors that contributed to its success:
BlackRock filed a registration statement with the SEC for the iShares Blockchain and Tech ETF in January 2024, which seeks to track the investment results of an index composed of companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies. This was a clever and strategic move, as it allowed BlackRock to test the waters and gauge the interest and response of the SEC and the market for a crypto-related ETF.
BlackRock leveraged its reputation and influence as the world’s largest asset manager, and its expertise and experience in launching and managing ETFs, to convince the SEC and the market of the viability and value of a Bitcoin ETF. BlackRock also collaborated and consulted with other stakeholders and experts in the crypto industry, such as Coinbase, Fidelity, and VanEck, to address the SEC’s concerns and requirements.
BlackRock integrated its Aladdin operating platform with Coinbase’s leading crypto exchange, to create a comprehensive and seamless solution for the IBIT ETF. Aladdin is BlackRock’s proprietary technology platform that provides portfolio management, risk management, and trading services to its clients and partners.
Coinbase is the largest and most trusted crypto exchange in the US, with over 70 million verified users and over $400 billion in assets on its platform. By integrating Aladdin and Coinbase, BlackRock was able to minimize the tracking error and expenses for the IBIT ETF, and to offer a secure and reliable custody and execution service for the underlying Bitcoin.
The IBIT ETF was launched on the Nasdaq stock exchange, with the ticker symbol IBIT, and an initial price of $10 per share. The IBIT ETF tracks the performance of the Coinbase Bitcoin Index, which is a market capitalization-weighted index that measures the price of Bitcoin based on the transactions and balances on Coinbase’s platform.
The IBIT ETF was met with a huge and positive response from the market, as it attracted over $2 billion in assets under management and over $500 million in daily trading volume in its first week of trading. The IBIT ETF also outperformed the GBTC, which is the largest and most popular Bitcoin investment product in the US, with over $40 billion in assets under management.
The IBIT ETF had a lower expense ratio of 0.95%, compared to GBTC’s 2%, and a lower premium or discount to the net asset value (NAV) of Bitcoin, compared to GBTC’s high and volatile premium or discount.
The launch of the IBIT ETF was a historic and groundbreaking event for the crypto industry, as it marked the first time that US investors could access and invest in Bitcoin through a regulated and transparent ETF. The IBIT ETF also paved the way for more innovation and adoption of crypto and blockchain in the US and the world, as it signaled the growing acceptance and recognition of Bitcoin as a legitimate and valuable asset class by the SEC and the market.
How BlackRock Owns 5.53% of the Largest Bitcoin Holder
Another impressive and surprising fact about BlackRock and its crypto portfolio is that it owns 5.53% of the largest Bitcoin holder, which is MicroStrategy.
MicroStrategy is a business intelligence and software company that has become one of the most prominent and influential advocates and investors of Bitcoin in the corporate world. MicroStrategy has accumulated over 120,000 Bitcoins, worth over $5 billion, as part of its treasury reserve strategy, and has issued over $2 billion in debt to finance its Bitcoin purchases.
But how did BlackRock become MicroStrategy’s largest shareholder, and what does it mean for BlackRock and its crypto portfolio? Here are some of the details and implications of this fact:
BlackRock owns a 5.53 percent stake in MicroStrategy, which is equivalent to over 1.6 million shares, worth over $1 billion. BlackRock acquired its stake in MicroStrategy through its various funds and ETFs, such as the iShares Core S&P 500 ETF, the iShares ESG Aware US Aggregate Bond ETF, and the iShares Russell 1000 Growth ETF.
BlackRock’s stake in MicroStrategy gives it indirect exposure and access to Bitcoin, as MicroStrategy’s value is largely influenced by the price and performance of Bitcoin. According to a recent analysis by Forbes, BlackRock’s stake in MicroStrategy is equivalent to owning over 6,600 Bitcoins, worth over $300 million. This makes BlackRock one of the largest institutional holders of Bitcoin, even though it does not directly own any Bitcoin.
BlackRock’s stake in MicroStrategy also reflects its bullish outlook and confidence in the company and its CEO, Michael Saylor, who is one of the most vocal and influential proponents of Bitcoin in the corporate world. Saylor has repeatedly stated that Bitcoin is the best store of value and hedge against inflation, and that he plans to hold Bitcoin for the long term, regardless of the market volatility.
Saylor has also encouraged and advised other companies and institutions to adopt Bitcoin as part of their treasury reserve strategy, and has shared his insights and experiences with Bitcoin through various platforms and events, such as the Bitcoin for Corporations conference, the MicroStrategy World conference, and the Saylor Academy.
BlackRock’s stake in MicroStrategy also signals its openness and interest in the crypto space, as it has made some moves and statements that indicate its positive attitude and potential involvement in the crypto industry. For instance, BlackRock has filed documents with the SEC that show that some of its funds may invest in Bitcoin futures, and has also hired a blockchain and crypto expert as its new chief investment officer of global fixed income.
Additionally, BlackRock’s CEO, Larry Fink, has expressed his curiosity and optimism about Bitcoin and crypto, and has said that Bitcoin could become a global asset and that crypto could transform the financial industry.
How BlackRock Invested $384 Million in Bitcoin Mining
Another interesting and surprising fact about BlackRock and its crypto portfolio is that it invested $384 million in Bitcoin mining companies in August 2023, as part of its strategy to explore the potential impact of digital currencies on the global economy.
Bitcoin mining is the process of creating new Bitcoins and securing the Bitcoin network, by using specialized computers to solve complex mathematical problems and verify transactions. Bitcoin mining is a profitable and competitive activity, as miners are rewarded with newly created Bitcoins and transaction fees for their work.
However, Bitcoin mining is also a controversial and challenging activity, as it involves several issues and risks, such as:
High energy consumption and environmental impact, as Bitcoin mining requires a lot of electricity and generates a lot of carbon emissions and waste heat.
Regulatory uncertainty and legal restrictions, as Bitcoin mining is subject to different laws and regulations in different countries and regions, and can face bans, taxes, or sanctions from authorities.
Technical complexity and security threats, as Bitcoin mining requires sophisticated hardware and software, and can be vulnerable to cyberattacks, theft, or sabotage.
Despite these issues and risks, BlackRock invested $384 million in Bitcoin mining companies in August 2023, as part of its strategy to explore the potential impact of digital currencies on the global economy. Which Bitcoin mining companies did BlackRock invest in, and what does it mean for BlackRock and its crypto portfolio? Here are some of the details and implications of this fact:
BlackRock invested $384 million in four Bitcoin mining companies, namely Marathon Digital Holdings, Riot Blockchain, Bitfarms, and Hut 8 Mining. These are some of the largest and most established Bitcoin mining companies in the world, with operations in North America and other regions, and with a combined hash rate of over 10 exahashes per second, which is equivalent to over 7% of the total Bitcoin network hash rate.
BlackRock’s investment in Bitcoin mining companies gives it direct exposure and access to Bitcoin, as these companies generate and hold a large amount of Bitcoins as part of their mining operations. BlackRock can also benefit from the appreciation and dividends of these companies’ stocks, which have performed well in the past year, as the demand and price of Bitcoin have increased.
BlackRock’s investment in Bitcoin mining companies shows its support and commitment to the environmental and social impact of Bitcoin mining, as these companies are adopting and promoting green and sustainable practices, such as using renewable energy sources, reducing carbon emissions, and supporting local communities and causes.
BlackRock can also influence and encourage these companies to improve their environmental, social, and governance (ESG) standards and performance, as part of its ESG investment strategy and policy.
BlackRock’s investment in Bitcoin mining companies was a bold and innovative move, as it demonstrated its interest and involvement in the crypto space, and its recognition and appreciation of the value and potential of Bitcoin mining.
BlackRock’s investment in Bitcoin mining companies also contributed to the growth and development of the Bitcoin network and ecosystem, as it increased the security, stability, and diversity of the network, and supported the innovation and adoption of the technology.
Conclusion: Why BlackRock is the Ultimate Crypto Leader in 2024
In this article, we have seen that BlackRock is not just a passive observer or a casual participant in the crypto space, but a proactive leader and a visionary pioneer. BlackRock has shown its interest and involvement in the crypto space, by launching and managing innovative and valuable products and services, such as the IBIT ETF, and by investing and supporting influential and impactful companies and projects, such as MicroStrategy and Bitcoin mining.
BlackRock has also shown its recognition and appreciation of the value and potential of crypto and blockchain, by exploring and leveraging the opportunities and benefits that they offer, such as diversification, innovation, and returns, and by addressing and overcoming the challenges and risks that they pose, such as regulation, security, and ESG.
On top of that, BlackRock has also shown its mission and impact on the crypto space and the global economy, by helping its clients and partners achieve their financial goals and by making a positive difference on society, through its crypto portfolio and activities.
