China’s banning of cryptocurrencies and crypto mining in the summer of 2021 continues to pay dividends for the U.S. as increasingly more companies and their supply chains develop domestically. The latest potential is that of Intel, an American manufacturer of semiconductor chips that are used in bitcoin and cryptocurrency mining.
Intel is currently being slated to deliver its chips to major bitcoin miners in the U.S. in the third quarter of this year and could be aligning to become a primary supplier for those bitcoin mining companies within the U.S., reports Amplify ETFs in its latest BLOK-Chain Monthly newsletter.
When China banned mining, many miners moved to the U.S., often establishing themselves in areas that have readily available access to renewable energy. This has meant that the bitcoin network and the mining associated with it have become much greener in the span of half a year, and now as domestic production kicks in for vital chips that have seen supply chain shortages since the pandemic’s onset, these same bitcoin mining companies could see substantial cost savings.
Chinese companies have been a dominant supplier of the chips that bitcoin miners prefer, but at a 25% taxation rate, they have become increasingly costly as supply shortages have driven up prices. Easily attainable, more reliable domestic sources of chips that bypass much of the supply chain and offer cost savings could see Intel rapidly becoming a big supplier for bitcoin mining.
Actively Managed Exposure to Crypto With BLOK
For investors who want access to the growing crypto space with diversified exposure, the Amplify Transformational Data Sharing ETF (BLOK) can be a great solution. BLOK invests in companies within crypto that continue to grow and capitalize on the potential of blockchain, or supply vital components for that growth, such as Intel and the bitcoin miners slated to use Intel’s chips.
“The crypto mining industry, which represents about 22% of the BLOK holdings, remains a moat-like business in a commodity-like industry. Meaning, the largest miners enjoy great economics,” write co-portfolio managers of BLOK Dan Weiskopf and Mike Venuto in the newsletter.
BLOK currently has $930 million in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.
The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.
BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of December, top allocations within the blockchain industry included transactional at 38.0%, crypto miners at 23.0%, and venture at 11%. BLOK invests across the blockchain landscape, in miners, exchanges, and developers.
BLOK has an expense ratio of 0.71% and currently has 47 holdings, including companies such as Intel and Nvidia.
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