Vanguard Group, the esteemed asset management titan boasting $7 trillion in assets under management (AUM), has recently acquired a 10% stake in Riot Blockchain, a Colorado-based firm focused on bitcoin mining. This surprising move shows a strong institutional commitment to the cryptocurrency space, despite the traditional financial powerhouse’s historically cautious stance on digital currencies.
The financial behemoth’s investment in Riot Blockchain, a company committed to expanding and upgrading its mining operations to secure the most energy-efficient miners available, is noteworthy due to Vanguard’s previously stated opposition to cryptocurrencies. With this move, Vanguard now indirectly provides its customers exposure to the bitcoin market without changing its official anti-crypto stance.
According to the filing with the Securities and Exchange Commission (SEC), Vanguard now owns approximately 15.22 million shares of Riot Blockchain, representing a 9.09% ownership stake in the company. This represents an increase of 51.55% in shares and an increase in total ownership of 0.48% from their previous filing.
As Riot Blockchain operates under a co-location hosting agreement with Coinmint, its primary mining facility is in upstate New York. Riot also maintains certain non-controlling investments in other blockchain technology companies. Analysts predict an upside of 47.62% for Riot Blockchain from its latest reported closing price of $6.52.
Even with Vanguard’s latest investment in Riot, Vanguard customers can only gain exposure to the crypto market through purchasing over-the-counter bitcoin or crypto funds like the Bitwise 10 Crypto Index Fund (BITW) or Grayscale Bitcoin Trust (GBTC). However, they also have the option to buy shares in publicly traded bitcoin mining companies like Riot Blockchain and Argo Blockchain or companies like MicroStrategy that own bitcoin and hold it on their balance sheets.
This move follows Vanguard’s pattern of using blockchain technology despite its reluctance to engage directly with cryptocurrencies. The firm invested $1.15 trillion of its assets in an index-tracking system backed by blockchain technology in 2017, anticipating that blockchain would update data in real-time and eliminate manual processes of updating index funds.
In 2020, Vanguard partnered with other Wall Street firms to apply blockchain technology to the forex trading market. This new product would allow asset managers to trade currencies without relying on banks as intermediaries, a testimony to the transformative potential of blockchain technology in the financial sector.
Vanguard’s recent investment in Riot Blockchain, combined with its active use of blockchain technology, could hint at a shifting stance towards cryptocurrencies as the asset manager now owns half a billion dollars worth of Riot Blockchain and Marathon Digital crypto mining shares. However, the firm maintains its position against digital assets as speculative and volatile, often highlighting the risks involved in cryptocurrency investing.
In this fast-paced and constantly evolving financial landscape, it remains to be seen whether Vanguard’s foray into Riot Blockchain is a signal of more cryptocurrency-related moves to come or if it simply remains an isolated strategy. For now, Vanguard users looking for exposure to digital assets will have to continue navigating the limited options currently available.
