This is how the financial giant can influence Bitcoin

Blackrock acts as a trustee $10 trillion for his customers. With its ETF provider iShares, Blackrock dominates the global ETF market. With approximately 120 million investors iShares has accumulated approximately $2.5 trillion in client funds. The company is repeatedly criticized for its increasing influence on the financial world. The question is therefore justified as to how strongly institutional investors can influence the largest decentralized network, which stands in contradiction to its censorship-resistant values.

Blackrock influences Bitcoin indirectly via Bitcoin ETFs

In order to replicate physically replicating indices, iShares must buy large shares of stock in individual companies for its clients. Even if client funds are not owned by iShares, they are managed by a provider. It is often warned that if too many investors panic sell, liquidity bottlenecks will be triggered.

Assuming Blackrock would offer Bitcoin spot ETFs, the group would have to buy “real” Bitcoin according to the scheme above. Bitcoin, as a scarce commodity, would increasingly come under Blackrock’s management along with its liquidity, which could increase the risk of cluster risk.

However, getting started with Bitcoin ETFs also has its positive sides. Because the strong liquidity of new investors from the conventional stock exchange sector could boost the Bitcoin price. You can read more about this in a detailed article about the background of Bitcoin ETFs.

Blackrock influences Bitcoin directly through the miners

Even if Blackrock as an ETF provider could not completely buy out the decentralized Bitcoin network, Bitcoin would not function without the miners who mine new coins. Institutional investors could therefore influence Bitcoin’s PoW consensus by buying shares in mining farms.

Among the largest Bitcoin mining companies from the USA are among others RIOT Blockchain and Marathon Digital Holdings. Blackrock almost invested in 2021 $400 million in bitcoin mining stocks – in Riot Blockchain and Marathon Holdings through a range of mutual funds and ETFs. According to Fintel, Blackrock is currently holding about 7.4% stake in Marathon Digital and 6.8% stake in RIOT Blockchain.

Also the high-revenue American miner Core Scientific borrowed Blackrock $17 million capitalto allow mining despite filing for bankruptcy. This debt loan made Blackrock the largest shareholder in Core Scientific.

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Bitcoin supports chances of profit – also for Blackrock

It is no longer news that institutional investors are showing obvious interest in Bitcoin and the mining industry behind it. In view of the upcoming Bitcoin Halvings 2024, the competitive pressure for the lucrative mining business is intensifying; this event could play into the hands of better-financed miners, backed by large US investors like Blackrock.

Whether through Bitcoin ETFs or via the mining industry – in both scenarios Blackrock would benefit if demand for Bitcoin increased in the long term. To be fair, it must be conceded that the financial giant does not want to control Bitcoin with tyrannical intentions, but wants to maximize their customers’ profits in the interests of their customers. Whether and to what extent the financial world benefits from this concentrated form of asset management, that will one day be answered in retrospect.