Fidelity Buys 7.5% Of Marathon Digital Holdings
Last month, Fidelity Investments Inc. bought a 7.5% stake in one of the most extensive bitcoin mining operations, Marathon Digital Holdings. There were four active broad index-based funds: Fidelity Nasdaq Composite Index Fund, Fidelity Extended Market Index Fund, Fidelity Total Market Index Fund and Fidelity Series Total Market Index Fund. By combining all of these funds, they have a market capitalization of $160 billion. However, the percentage dedicated to Marathon is small, while some of the index funds are popular in retirement accounts.
The recent acquisition represents a growing trend in institutions and individual investors gaining publicity to the crypto industry through debt securities and traditional equity.
Marathon’s stock trades are similar to the price of bitcoin. So while bitcoin increased by 240% in the last year, Marathon shares also rose by 660%.
Therefore, these Fidelity index funds might effectively access the volatile crypto without immediately owning the digital asset. It might also mean that several investors in the U.S. have cold exposure to digital assets in their investment portfolios or retirement accounts.
Overview of the development
Fidelity meets other institutional giants with this purchase. Those giants include Susquehanna by 2.8%, the Vanguard Group by 7.59%, and Blackrock 1.58%. The company was one of the first financial institutions to start including cryptocurrencies and digital assets.
Several years ago, executives in the company started to mine bitcoin in their offices for experimenting with the technology. Later, in 2018, the company decided to launch Fidelity Digital Assets. They aim to offer digital assets and crypto to sophisticated investors, market intermediaries and family offices. The company currently serves more than 150 clients.
In an interview after the Fidelity disclosure, Marathon CEO Fred Thiel said that they are excited about institutional ownership. Thiel added that the institutional ownership grew in stock after a year.