It’s just one day, but the August 14 performance delivered by the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) was noteworthy.
The ETF surged nearly 6% despite profit-taking in bitcoin after the largest digital currency hit an all-time high late Wednesday/early Thursday. WGMI’s August 14 resilience indicates there was more to the ETF’s story on that particular trading day. That was indeed the case.
TeraWulf (WULF), a top 10 holding in WGMI, surged 59.52% on volume that was more than six times the daily average. This came on news that Google parent Alphabet (GOOGL) is taking an 8% stake in the WGMI member firm as part of that company’s “two 10-year high-performance computing (HPC) colocation agreements with Fluidstack.”
Why It Matters to WGMI Investors
It’s commonplace for larger companies to make investments in smaller firms. The Alphabet/TeraWulf story may be no more than a talking point for those skeptical about what a company like Alphabet wants with a cryptocurrency miner. However, the opposite line of thinking is more appropriate, because the Alphabet/TeraWulf deal is another sign that cryptominers, including WGMI holdings, have competencies relevant to artificial intelligence (AI) and are spreading their wings to that effect.
“To support the buildout, Google will backstop $1.8 billion of Fluidstack’s lease obligations to support project-related debt financing and will receive warrants to acquire approximately 41 million shares of TeraWulf common stock, equating to an approximately 8% pro forma equity ownership stake—aligning TeraWulf with one of the most influential global AI partners,” according to a press release. “TeraWulf also plans to access the capital markets to fund a portion of the project.”
In other words, TeraWulf has technology that’s relevant to Alphabet’s AI ambitions and the internet search giant has the capital TeraWulf needs to bolster its HPC plans. There are other benefits for TeraWulf investors, too.
“Given the expected improvement in our credit profile, we’ve refined our financing strategy to focus on a series of capital markets initiatives […] with the benefit of our new financial support from Google and our updated lease agreements,” said CFO Patrick Fleury on a Thursday conference call.
Something else for WGMI investors to keep abreast of: Some experts argue that it’s surprising that it’s taken this long for a big-name tech company to get involved with a crypto miner for AI/HPC purposes. That could be an indication that the Alphabet/TeraWulf deal is more the tip of the iceberg than the end of the story.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
