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Fidelity holds about 10.6% stake in Canadian Bitcoin mining firm Hut 8, according to a regulatory filing Fidelity’s investment in Hut 8 is significant since the asset management giant is known to be mining BTC since 2014.
Hut 8 filed an alternative monthly reporting (AMR) with the Ontario Securities Commission, noting that Fidelity represents a certain mixture of its common shares and common share purchase warrants, representing around 10.6% stake.
As per the filing:
“Fidelity holds 8,396,138 Common Shares and 2,054,956 common share purchase warrants, as a result of which Fidelity is deemed to hold 10,451,094 Common Shares representing approximately 10.58% of the outstanding shares of that class.”
An AMR is filed by Canadian public companies in order to disclose their “eligible institutional investor”. In the case of Hut 8, this is Fidelity.
The event that caused Hut 8 to file the AMR is its recent underwritten public offering, which closed on June 25. Hut 8 then issued 5,750,456 “units” (each unit consisted of one common share and one common share purchase warrant) at a price of $1.45 per unit for raising around $8.34 million. The company managed to raise funds in order to purchase a mix of MicroBT’s Whatsminer M30S, M31S, and M31S+ to improve its Bitcoin hash rate.
Importance of Investment in Hut 8 Made by Fidelity
Fidelity’s investment in Hut 8 is pretty important since the asset management giant is famous for mining Bitcoin since 2014. Earlier this year, Fidelity employed a Bitcoin mining engineer in order to escalate its actions.
A Fidelity spokesperson then stated:
“Over the past couple of years, we have expanded our mining efforts to ramp up our knowledge of the space. We have explored optimal locations, hardware procurement, mining farm setups, and the economics of the mining industry as a whole.”
Hut 8 started with its work back in 2017 and is still not making any profit. As a loss-making company, it went through “a loss of $0.6 million in Adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization], compared to Q1-2019 loss of $1.3 million.” The company also recently endured a management change.
Hut 8 is listed on the Toronto Stock Exchange since March 2018, and its share price is down by over 65% since listing. It is currently trading at about $0.82 a piece and has a market capitalization of over $80 million.
Why Investors Love Bitcoin?
Meanwhile, recently Fidelity Digital Asset’s director of research Ria Bhutoria went on to explain why investors think Bitcoin is a good hedge against government intervention.
“So 25% of European investors said that they find the freedom from government intervention characteristic [of Bitcoin] to be appealing versus 10% of US investors.”
She was actually thinking of Fidelity’s recent survey of 800 institutional investors.
Negative interest rates mean that banks will start charging interest to hold money, as opposed to giving it out. They’re already common in Switzerland and Denmark. The current financial crisis caused by the COVID-19 outbreak has brought up debates about the possibility of negative rates even in the U.S.
Bhutoria went on to explain:
“I think one explanation could be the prevalence of negative interest rates in Europe. As a result of that, [for] digital assets like Bitcoin, which don’t generate yield, that turns into a feature, not a bug in a negative yield environment.”
She also added that the interest of institutional investors like pension, endowments, family offices, financial advisors and so on, “is heavily focused on Bitcoin. Since it’s the largest and oldest digital asset, it has the most mature infrastructure, including increasing support from legacy institutions.”