Where there's an investment theme, an exchange traded fund usually isn't far behind. Or it can be said that naysayers subscribing to the “all the good ideas are taken” school of thought are likely wrong because the pace of new ETF introductions remains torrid again in 2021.
Get a load of this: There's now an ETF dedicated to environmentally friendly cryptocurrency mining thanks to the debut of the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) on July 20.
Actively managed, RIGZ conquers at least one of the battles new ETFs, regardless of investment objective face: Timing. Recently, Elon Musk rattled crypto markets by expressing concern regarding the carbon footprint left by mining for bitcoin and other digital assets. Indeed, there is significant power consumption involved with bitcoin mining.
A bitcoin mining rig contains graphics processing units (GPUs) and when those rigs run 24 hours a day, which they usually do, they emit significant heat, meaning large-scale bitcoin mining centers and warehouses also have ample cooling needs. All that can mean heavy power use and big-time carbon footprints.
“The Digiconomist's Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,544 kWh to complete, or the equivalent of approximately 53 days of power for the average US household,” reports Oscar Gonzalez for CNET.
RIGZ Setting the Record Straight
Given that level of power consumption and clients' affinity for environmentally friendly investing strategies, advisors are right to be concern about eco implications of bitcoin and the related mining equities. However, RIGZ alters this conversation for the better.
CoinShares, a digital asset management firm, which is back of Viridi Funds, “found the bitcoin mining industry utilizes over 70% renewable energy and is one of the most sustainable industries on the planet,” said CoinShares Chief Strategy Officer Meltem Demirors.
One way of looking at RIGZ is that it separates fact from fiction in the crypto mining debate, which is pivotal at time of increasing environmental on and rising opportunity in this space.
“Bitcoin and cryptocurrencies continue to grow in importance, and we are witnessing a new wave of institutional support for this emerging asset class. We launched RIGZ to provide investors with an ETF that attempts to align purpose and profit by investing in the infrastructure that underpins the entire ecosystem with sustainability in mind,” said Viridi CEO Wes Fulford.
In addition to dispelling the environmental mythology surrounding crypto mining, RIGZ presents advisors with a straight-forward investment case and holdings that are familiar to most clients. For example, and these names are subject to change owing to active management, the RIGZ roster includes the likes of Nvidia (NVDA), Advanced Micro Devices (AMD) and Taiwan Semiconductor (TSM).
Speaking of Investment Implications...
As bitcoin is often dubbed “digital gold,” there's another gold comparison to be made here. While investors have long shown a willingness to own physical gold, coins or related ETFs, they are significantly less allocated to miners though there are plenty of instances when that under-weighting worked against investors.
RIGZ presents growth-hungry, risk-tolerant clients with an opportunity to avoid the gold miners mistake.
“The rationale for owning a mining and infrastructure company is much the same as a senior gold producer – leveraged returns as compared to the underlying commodity,” adds Fulford. “We believe that based on recent developments within the Chinese mining sector, North American miners that have access to sustainable low-cost power, large fleets of new-generation rigs, and access to capital are well positioned to generate higher returns during the months and years ahead.”
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