Fidelity International, the London-based giant asset management company, is recently revealed to hold a significant ownership stake in the publicly traded block reward mining group, Hut 8 Mining Corp.
Hut 8 recently raised $8.3 million by selling 5.7 million “units” to investors at C$1.45 apiece. In an alternative monthly reporting (AMR) filing with the Ontario Securities Commission (OSC) last week, Fidelity disclosed it had purchased slightly over 4.1 million “units” of Hut 8 during that June 23, 2020, overnight market offering. Its investment comprised roughly three-quarters of the total amount raised by Hut 8.
The “units” comprise one common share and one common share purchase warrant. The share purchase warrant has an exercise price of $1.80 per share until December 25, 2021.
Because of the purchase, Fidelity now holds 8,396,138 total common shares and 2,054,956 common share purchase warrants. These 10,451,094 common shares combined represent approximately 10.58% of the outstanding shares of that class for the Toronto-based Hut 8. It doubles the amount of shares Fidelity previously held in the block reward miner.
Fidelity has been a quiet but long-time supporter of block reward mining. The firm is rumored to have mined the BTC digital currency since 2014. The AMR notes that the purchase was for investment purposes only in accordance with the ordinary course of business.
Gone are the good old days of price manipulation and FOMO driving up BTC price, thus enabling bigger firms to exit with a tidy profit. Institutional investors cannot continue to turn a blind eye to stagnant market conditions and low en masse mainstream BTC adoption.
Block reward miners like Hut 8 are piling hash into an over-saturated market, hoping a nonscaling zero utility token magically goes up in price. Previously I likened block reward miners to poker players hoping to get that lucky card dealt on the river that wins them a massive pot in a come from behind victory.
The sector is now worse than gambling because it depends on divine intervention to work instead of odds and probability. The strategy is most likely a formula for bankruptcy by teams too committed to their failed business model.
With over $479.9 billion in assets under management, Fidelity’s over-investment in the non-validated block reward mining sector will one day leave them with regrets and disappointment and might cost a few jobs. The company will survive. As it looks back retrospectively analyzing the failure, its leaders will discover it missed an opportunity to support the only public blockchain project capable of enterprise and mainstream adoption i.e. Bitcoin SV.
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