Inside BLOK ETF: ‘We Use the Miners to Play Offense and Defense’

Amplify Investments’ BLOK ETF now allocates roughly 21% to bitcoin mining companies — up from an all-time-low of less than 10% at the end of 2022


FOTOGRIN/Shutterstock modified by Blockworks


The largest blockchain ETF has bolstered its positions in bitcoin miners in recent months after the fund’s allocations to such companies hit an all-time low at the end of 2022.  

Outside of the mining sector, the managers of Amplify Investments’ Transformational Data Sharing ETF (BLOK) are watching how regulatory questions could impact Coinbase, and also have an eye on companies such as Overstock and Nubank. 

BLOK launched in January 2018 and has about $460 million assets under management. The fund has returned 33.3% year to date, according to ETF Database. Those returns rank it 73rd among all ETFs so far in 2023, the data indicates.

More money toward miners

Mike Venuto, who co-manages BLOK with Dan Weiskopf, told Blockworks in December that the fund’s exposure to miners was the lowest it had ever been.

But Weiskopf said this week that the fund’s allocation to mining firms rose from about 9.5% in December to 16.5% at the end of January. BLOK now has roughly 21% of its assets in such companies, he added.

“We use the miners to play offense and defense,” Weiskopf said. “We became more optimistic around the price action of bitcoin given how oversold it had become.”

The fund’s allocation to miners peaked at roughly 30% in October 2021 — just weeks before bitcoin’s price hit an all-time high of nearly $70,000.

BLOK’s top holding in the mining space — at 4.84% — is Riot Platforms, given its size, balance sheet and success in aggressively building out its operations, the portfolio manager said. The company, which has the bulk of its operations in Texas, had a hash rate capacity of 10.5 exahash per second (EH/s) at the end of April.

Riot’s stock price is up 258% so far in 2023.

The Amplify fund also has a 3.66% position in CleanSpark — a holding that adds some geographical diversity, Weiskopf noted. The company, which revealed Thursday it has bought 12,500 new bitcoin mining machines, has facilities in New York and Georgia. 

BLOK added to its position in Canada-based Hive Blockchain Technologies earlier this year as well. Weiskopf added that he and Venuto continue to monitor Hut 8 Mining — a company set to merge with US Bitcoin Corp. The fund currently allocates 2.01% to Hive and 2.98% to Hut 8.  

Other top holdings to watch

BLOK’s top holding overall is MicroStrategy, at 4.92%. The business intelligence firm is the largest publicly-traded holder of bitcoin, as its stack has grown to about 140,000 BTC. 

Weiskopf said he views MicroStrategy as a proxy for bitcoin. 

The company’s stock was up 109% year to date, as of Thursday morning. Bitcoin is up about 62% in that span. 

Weiskopf also noted the rise of Ordinals, an NFT protocol that launched on Bitcoin mainnet in January and contributed to bitcoin transaction surges last month.   

“I feel like bitcoin is out of the bear market now and in a much more bullish stance at this point,” he said.  

BLOK managers are also keeping an eye on Coinbase, which reduced its net loss from $557 million during the fourth quarter of last year to $79 million in the first three months of 2023.

The blockchain ETF trimmed its position in the company by between 50 and 100 basis points after Coinbase received a Wells notice from the SEC in March— a regulatory action Weiskopf said was not unexpected. BLOK currently allocates 3.97% to the crypto exchange.   

“They’re trying to work with regulators on a constant basis, and it’s almost volunteering to be abused,” he said. “But they’re doing it to push forward the need for regulation in this space. It’s just so early [to know] how all this plays out.” 

BLOK has recently added to its position in Nu Holdings, the parent company of Brazilian fintech bank Nubank, as well as internet retailer, which has a portfolio of blockchain companies run by venture capital firm Pelion Venture Partners. 

Muted YTD returns compared to some competing funds

BLOK has underperformed several other crypto-related ETFs so far in 2023.  

Valkyrie’s Bitcoin Miners ETF (WGMI) has posted year-to-date returns of about 147%, according to ETF Database. The VanEck Digital Transformation ETF (DAPP) and the Bitwise Crypto Industry Innovators ETF (BITQ) are up 118% and 108%, respectively, so far in 2023. 

Actively managed BLOK, meanwhile, has returned 33.3% year to date.

WGMI has allocations of roughly 10% each in Riot Platforms, CleanSpark and Marathon Digital. The top holding of DAPP and BITQ, Applied Blockchain Inc., accounts for slightly above 10% of the net assets of each of those funds.   

BLOK has opted against high concentrations in the fund’s top holdings, Weikopf said.

“While we might — in certain cases on the up — give up some of the return, I think diversification over time has a benefit over time over a very concentrated portfolio that has massive execution risk,” he said. 

Venuto previously told Blockworks that BLOK is willing to “hide out in high-quality names that are tangentially participating in the blockchain industry,” such as IBM, during crypto market turbulence.

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