Asset manager Viridi Funds has launched its first product: an exchange-traded fund (ETF) focused on the crypto mining sector.
Dubbed the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF, the fund will invest in publicly traded crypto mining and infrastructure companies that are environmentally focused. The ETF is listed on the New York Stock Exchange's (NYSE's) Arca platform with the ticker symbol RIGZ and has an expense ratio of 0.90%.
When asked how specifically the fund will select crypto mining companies focused on clean energy, Viridi Funds CEO Wes Fulford told The Block that the firm has an internal proprietory screening algorithm that will help select companies based on their current and planned energy source.
Besides that screening, Viridi will analyze companies from the financial metrics perspective, said Fulford, who is a former CEO of crypto mining company Bitfarms, which is listed on the Toronto Stock Exchange's (TSX's) Venture Exchange and recently received approvals to trade on Nasdaq.
Notably, Bitfarms is the second-largest holding of the RIGZ ETF, with nearly 10% of the fund's net assets in the stock, according to its website. Other top holdings of the fund include Marathon Digital Holdings, Hut 8 Mining, Samsung Electronics, Nvidia, AMD, and others. The fund will invest 80% of its assets in crypto mining companies and the rest in mining infrastructure firms such as semiconductor companies, said Fulford.
"We're trying to be a pure-play crypto infrastructure offering" by investing in companies associated with the entire spectrum of crypto mining, he said. The ETF will also likely have indirect exposure to bitcoin and other cryptocurrencies as publicly listed mining companies often have these digital assets on their balance sheets, said Viridi.
The RIGZ ETF was filed in mid-April when bitcoin was trading at around $64,000. The world's largest cryptocurrency is currently trading below $30,000.
When asked if the launch timing of the ETF concerns you, Fulford said: "I'd rather be buying at these levels than I would be back in February and March, just given how inflated some of the equities were at that point. It's a better ground zero or entry-level for a new fund to be deploying capital into the sector."
Indeed, several crypto mining stocks were trading at higher levels and even outperformed bitcoin's gains earlier this year, according to The Block's Data Dashboard. Since then, stock prices, as well as bitcoin's price, have dropped sharply.
Viridi Funds is backed by several investors, including CoinShares, Alameda Ventures, Luxor Technology, Fundamental Labs, and Mechanism Capital. Fulford declined to share how much the firm has raised from these investors.
Looking at the future, Viridi plans to launch more "thematic products" focused on the crypto ecosystem, said Fulford.
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