Valkyrie Funds launches ETF focused on Bitcoin mining companies

Valkyrie Funds announced the launch of the Valkyrie Bitcoin Miners ETF, the exchange-traded fund focused on Bitcoin mining operators. ETF will focus on firms that employ at least 77% renewable energy.

The Valkyrie Bitcoin Miners ETF (WGMI) began trading on February 8 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 jargon for “we’re all gonna make it.”

About 77% of the energy consumed by the companies in the ETF 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.

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. In January, Argo and Bitfarms mined 172 Bitcoin and 301 Bitcoin, respectively.

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

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.

Other US-listed ETFs with heavy exposure to crypto miners include the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) and the Bitwise Crypto Industry Innovators ETF (BITQ). Both ETFs had rough starts to the year alongside the steep decline in the price of Bitcoin but have been bouncing back in the past few sessions as Bitcoin regained its footing.

In October, Valkyrie launched its Bitcoin Strategy ETF (BTF), primarily investing in Bitcoin futures contracts. 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.

In December, the US Securities and Exchange Commission (SEC) denied Valkyrie’s proposal to launch an ETF that would invest in Bitcoin directly. Also, the agency has rejected the applications from a handful of other issuers, leaving uncertainty around when it will approve such a product.