Bankless: 6 Ways to Invest in Bitcoin in 2024

Bankless

24-02-23 13:43

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Original Title: "6 Ways to Invest in Bitcoin in 2024"

Original Author: Jack Inabinet, Bankless

Translated by: Luccy, BlockBeats

Editor's Note:

Bankless analyst Jack Inabinet explores several main ways for individual investors to gain exposure to Bitcoin from multiple angles, covering Bitcoin miners, well-known Bitcoin mining companies, popular Bitcoin ETF products in the market, as well as self-custody and centralized exchanges. BlockBeats has translated the original article as follows:

Currently in the United States, spot Bitcoin ETF has started trading, making it easier than ever to obtain Bitcoin. However, not all investment methods are the same.

Today, we will introduce six of the most prominent methods used by individual investors to acquire Bitcoin, and discuss the advantages of each method to help you determine which one is best suited for you.

Bitcoin Miner

Bitcoin miners compete to solve complex cryptographic problems using energy-intensive computer equipment, hoping to guess a number or hash that will solve the problem and give them the ability to add the next block to the Bitcoin blockchain, as a reward for inflationary token rewards and transaction fees.

Miners usually do not deposit most of the bitcoins they mine into their accounts, but sell them to pay for operational costs (such as electricity) or expansion (buying new mining equipment). Because their income is denominated in bitcoin, the stock price of miners is closely related to the price of bitcoin.

As the halving approaches, it is important to remember that many miners may face a decrease in profitability, as currently 97% of their income comes from inflationary network rewards, which will be halved.

Due to unprofitable companies ceasing operations or selling mining equipment, the entire market may undergo consolidation, which will benefit the remaining miners as they will have greater control over the Bitcoin network's computing power, allowing them to mine a higher proportion of Bitcoin blocks.

Popular Bitcoin mining factories:

· Marathon Digital Holdings Inc. (MARA)

· Riot Platforms Inc. (RIOT)

· CleanSpark Inc. (CLSK)

MicroStrategy

Michael Saylor initiated his legendary Bitcoin bet in August 2020, transforming his business intelligence technology company into a Bitcoin custody giant. Today, the company holds nearly 1% of all upcoming Bitcoin shares.

Despite holding a large amount of Bitcoin, MicroStrategy does not charge management fees to its shareholders. Instead, it uses profits from its software business operations to cover these costs.

The value balance of MicroStrategy's Bitcoin holdings often trades at a premium or discount because there is no hard mechanism to enforce anchoring.

When MSTR's stock trades at a premium, management typically raises additional funds by selling shares in order to purchase more Bitcoin in the future, setting a soft cap on MSTR's market value that exceeds the true value of its software business and Bitcoin holdings.

Saylor repeatedly emphasized that he will not sell, and MSTR lacks any real mechanism to protect against downside risk, which means that the company's market value may trade at a discount for a considerable period of time, which is a significant risk for shareholders.

The fluctuation of MicroStrategy's stock between discount and premium provides a profitable opportunity for traders willing to hold the other side of the market during price discrepancies. However, in today's era where there are Bitcoin ETFs available for investment seeking pure Bitcoin exposure, holding this stock is not reasonable for investors seeking pure Bitcoin exposure.

现货 ETF

translates to

Spot ETF

in English.

The spot Bitcoin ETF approved as early as January 2024 is an important milestone in the cryptocurrency industry, allowing anyone in the United States to access pure cryptocurrency investment opportunities through traditional brokerage accounts, a product that has long existed in Canada and Europe.

The issuer of BTC ETF in spot market will hold actual Bitcoin on behalf of ETF shareholders through specialized cryptocurrency custody institutions (such as Coinbase Custody), whose sole responsibility is to store customers' digital assets.

The shares of spot ETF can be created or redeemed at any time by authorized participants, which means that the market price of shares is closely related to their net asset value, unlike the trust-based system, where the trading value of Grayscale's Bitcoin Trust (GBTC) fluctuates due to the volatility of Bitcoin demand.

Although some issuers are currently creating or redeeming, which means that the market price of shares will closely track their net asset value, unlike trust-based systems, resulting in a premium or discount in the trading price of Grayscale's Bitcoin Trust (GBTC) when Bitcoin demand fluctuates.

Although some issuers currently offer free exemptions on their spot BTC ETFs, these exemptions will eventually expire, and holders will be charged annual management fees based on the product they invest in, ranging from 0.19% to 1.5%.

One of the most attractive features of spot Bitcoin ETFs is their integration with the traditional financial system, which allows investors to purchase shares of these instruments from their existing traditional financial brokerage firms, alongside more traditional investments such as stocks and bonds.

In addition, placing these ETFs into existing tax-advantaged accounts such as 401(k) or IRA has significant benefits for long-term investors seeking to optimize tax efficiency.

The code for the popular US Bitcoin ETF for spot trading is:

· iShares Bitcoin Trust (IBIT)· Bitwise Bitcoin ETF (BITB)· VanEck Bitcoin Trust (HODL)· Valkyrie Bitcoin Fund (BRRR)· Grayscale Bitcoin Trust (GBTC)