Fidelity acquires 7.4% stake in Bitcoin mining firm Marathon

Fidelity Investments Inc. has invested in the Bitcoin mining firm Marathon Digital Holdings. The Boston-based financial services company purchased a 7.4 percent stake in the mining company for around $20 million.

The $20 million purchase was completed on July 22, 2021, according to Forbes. Fidelity made the purchase through four of its index funds, the Fidelity Extended Market Index Fund (FSMAX), Fidelity Nasdaq Composite Index Fund (FNCFX), Fidelity Total Market Index Fund (FSKAX), and Fidelity Series Total Market Index Fund (FCFMX).

With its 7.4 percent stake, Fidelity joins other investment giants that have substantial shares in the BTC mining firm. The Vanguard Group owns 7.58 percent of Marathon, Susquehanna owns 2.7 percent, and Blackrock owns 1.59 percent.

Fidelity is one of the first financial firms to embrace crypto and digital assets. It launched Fidelity Digital Assets in 2018, a stand-alone business that offers exposure to digital assets such as Bitcoin to sophisticated institutional investors.

Shares in crypto mining companies have become increasingly popular among individual and institutional investors for their tendency to track Bitcoin’s price but with amplified returns. While Bitcoin gained around 240 percent in the last year or so, Marathon shares soared by 660 percent.

“We’re super excited about the institutional ownership,” Marathon CEO Fred Thiel said. “If you look at the change from last year to this year and even the last two quarters have just been amazing [in] how much institutional ownership has grown in our stock.”

Unlike other U.S.-based BTC mining firms such as Core Scientific and Riot, Marathon does not own hosting and power facilities. The company believes that owning a hosting facility will not generate the same level of returns so it opted to focus its funds on deploying mining equipment.

“I think as an investor looking at mining stocks, you want to look at growth rate, you want to look at return on assets, you know it is a very CapEx intensive business,” Thiel added.

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