Mining crypto

Ethereum Merger Hasn’t Boosted Crypto Stocks Yet

The recently completed Ethereum merger – one of the most anticipated cryptocurrency events in recent memory – is yet to light the fire under crypto-correlated stocks, but there is lingering hope that the merger will have medium to long-term positive implications for crypto stocks.

If this scenario materializes, it could trigger a rise in exchange-traded funds such as the Invesco Algerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).

One of the reasons why the Ethereum merger is not yet on the rise for holdings in BLKC and SATO is the fact that the bulk of exchange-listed crypto miners, including those residing in these ETFs, mine bitcoin, not ether.

“Because the main change is the shift from mining to staking, the merger would affect Ethereum miners the most among companies in the ecosystem. However, most of the public crypto mining companies focus on Bitcoin mining, except for HIVE Blockchain Technologies (HIVE CN) and Hut 8 Mining Corp (HUT CN). Fortunately, ETH mining equipment is much cheaper and flexible than BTC mining equipment, so current ETH mining equipment can be reused. ETH is mined using Graphics Processing Units (GPUs), which are off-the-shelf computer hardware and can be used for multiple purposes, including mining various digital currencies,” noted analyst Alerian. Roxanna Islam.

The update on ether mining requiring GPUs is relevant for investors considering SATO as this ETF holds shares of Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) – the two major GPU chip makers .

The Ethereum merger has other potential longer-term benefits that could accrue to BLKC and SATO, including the potential to generate more revenue for crypto exchanges such as Coinbase (NASDAQ: COIN).

“The shift from mining to staking should benefit companies that participate in staking or serve as a platform for staking,” Islam added. “Staking involves depositing ETH to act as a validator, which can then produce rewards based on the deposited balance (similar to earning interest in a bank). To simplify the process, platforms like Coinbase (COIN) can facilitate staking in exchange for a percentage of the yield. The company has already seen an increase in revenue from its staking services in recent quarters from ETH and several other digital currencies.

SATO, which benchmarks the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts and ETPs (Index), allocates 3.35% of its weighting to Coinbase, making the stock the ETF’s seventh-largest holding .

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vettafi.com is owned by VettaFi, which also owns the index provider for BLKC and SATO. VettaFi is not the sponsor of BLKC and SATO, but the affiliate company of VettaFi receives index license fees from the sponsor ETF.
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