Argo Blockchain : and Bitfarms as top two holdings in Valkyrie’s Green Bitcoin Mining ETF on Nasdaq

• Firm's upcoming ETF to follow launches of its Bitcoin Strategy ETF (BTF) and Balance Sheet Opportunities ETF (VBB)
• The fund is set to have Argo Blockchain and Bitfarms as its top two holdings

Valkyrie Investments is set to launch an ETF focused on bitcoin mining operators with an emphasis on sustainability.

The Valkyrie Bitcoin Miners ETF (WGMI) will begin trading Tuesday on the Nasdaq. It invests in publicly traded miners using renewable energy as their primary energy source and carries an expense ratio of 75 basis points. WGMI is short for "WAGMI," crypto nomenclature for "we're all gonna make it."

Roughly 77% of the energy consumed by the companies in the ETF - on a portfolio-weighted basis - is from renewable energy sources such as solar, wind, hydropower and geothermal. Most are US-based businesses, although some are headquartered in Canada and the UK.

"We have found that mining companies that went the extra step here, versus carbon-neutral pledges or other initiatives, tend to maintain a lower overhead because renewable energy often costs less than other sources," Valkyrie Funds CEO Leah Wald told Blockworks. "This tends to raise profitability."

Registered investment advisors (RIAs), financial advisors and other market participants are looking to invest in pockets of the digital assets industry "in a climate-conscious manager," Wald said.

"We believe that bitcoin miners are leading the green energy revolution and that providing more access to people seeking opportunities to align with environmentally friendly companies can only serve to help make the environment cleaner," she said.

Argo Blockchain and Bitfarms are set to be the top holdings in WGMI with a 10% portfolio weighting. Other top holdings include Cleanspark, Hive Blockchain Technologies and Stronghold Digital Mining.

Argo and Bitfarms mined 172 bitcoin and 301 bitcoin, respectively, in January.

Based in London, Argo Blockchain last year committed to being "climate positive" by 2030.

"We're pleased to see another crypto mining ETF approved, especially one that has a sustainability focus," Argo Blockchain CEO Peter Wall told Blockworks in an email. "We think there is a strong market for investors in the sector as a whole, but especially for environmentally focused miners."

Bitfarms has five facilities in Quebec and acquired a 24-megawatt (MW) hydropower farm in Washington in November. It also began operating a 10-MW farm in Paraguay last month. Each facility is powered with 99% hydropower.

Valkyrie's new product follows the launch of Viridi Funds' Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) in July. The fund costs 90 bps and has $11 million of assets.

RIGZ has Bitfarms and Argo Blockchain as its third- and fourth-largest holdings, allocating about 8.8% and 6.6%, respectively to the miners, as of Feb. 7. Investments in Marathon Digital and Hut 8 Mining account for a combined 20% of the portfolio.

The WGMI launch comes after Valkyrie launched its Bitcoin Strategy ETF (BTF) - primarily investing in bitcoin futures contracts - in October. The fund group also brought to market its Balance Sheet Opportunities ETF (VBB) in December. The offering invests in the stocks of companies with exposure to bitcoin.

BTF has about $40 million assets under management, while VBB has less than $1 million.

The Securities and Exchange Commission denied Valkyrie's proposal to launch an ETF that would invest in bitcoin directly in December. The agency has rejected the applications from a handful of other issuers, leaving uncertainty around when it will OK such a product.

"We have a number of ideas we are currently exploring based on feedback from stakeholders, investors and other partners," Wald said, declining to comment further.

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• Ben Strack

  Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]