The Indirect Route: Investing In Bitcoin Without Buying It

Bitcoin has grown exponentially since its launch in 2009, and while many investors are keen to get involved in the crypto market, the process can be daunting and complex. There are, however, ways to invest in Bitcoin without actually owning it, which can be a safer and more accessible way to get involved. Indirect investment in Bitcoin can be achieved through investing in companies that hold Bitcoin, investing in its infrastructure, or investing in cryptocurrency-related investment funds.

Invest in companies that hold bitcoin

Investing in companies that hold Bitcoin is another way to gain exposure to the cryptocurrency without directly purchasing it. These companies often have Bitcoin-related businesses or use Bitcoin as a reserve asset. Here are some examples of companies that hold Bitcoin:

MicroStrategy Incorporated

MicroStrategy, a prominent business analytics and mobile software company, has adopted Bitcoin as its primary reserve asset. The firm has aggressively pursued a Bitcoin buying spree, scooping up millions of dollars worth of the cryptocurrency. As of May 2025, it holds 214,400 BTC in reserve, equivalent to $14.8 billion. MicroStrategy's shares soared over 350% in 2023 due to its scale of Bitcoin holdings. The company's CEO, Michael Saylor, is a vocal Bitcoin proponent and has made his personal holdings public, positioning him among the top 101 Bitcoin owners.

Tesla

The electric vehicle manufacturer Tesla joined the ranks of companies holding Bitcoin in December 2020, with a $1.5 billion investment. While Tesla sold 10% of its Bitcoin holdings in Q1 2021 to prove liquidity, it has maintained its Bitcoin position since then. As of May 2024, Tesla holds 9,720 BTC in its portfolio, worth around $677 million. The company's CEO, Elon Musk, has had an on-off relationship with Bitcoin, initially accepting and then abruptly discontinuing payments in Bitcoin for its products and services.

Marathon Digital Holdings Inc.

Marathon Digital, a Bitcoin mining company, holds 17,631 BTC in its corporate treasury, worth around $1.23 billion as of May 2024. The company aims to build the largest Bitcoin mining operation in North America and has expanded its operations with new mining facilities. While Marathon Digital faced challenges in Q1 2024, missing its revenue target, it remains committed to growing its Bitcoin mining capacity.

Hut 8 Mining Corp

Hut 8, a Bitcoin mining firm, holds 9,109 BTC, worth around $644 million. The company is listed on the Nasdaq Global Select Market and has committed to growing shareholder value by increasing its Bitcoin holdings. In November 2023, Hut 8 merged with fellow Bitcoin mining company US Bitcoin, further expanding its mining operations. Hut 8 reported impressive revenue growth of 231% year-on-year in its Q1 2024 results.

Riot Platforms, Inc.

Riot Platforms, a crypto mining outfit, holds 9,084 BTC, valued at approximately $643 million. The company has expanded aggressively, including the purchase of a one-gigawatt Bitcoin mining facility in Texas. Riot Platforms has rebranded to diversify its business model and navigate the challenges of the crypto winter and increased energy prices. Despite warnings about the profitability of Bitcoin mining, the company's stock price has proven resilient.

Coinbase Global, Inc.

Coinbase, a well-known crypto exchange, held 9,000 BTC in its treasury, worth just under $642 million as of June 2024. Coinbase went public in a landmark direct listing on the Nasdaq in April 2021, prior to which it revealed a $230 million Bitcoin holding.

By investing in these companies, you can gain exposure to Bitcoin's price movements and the potential growth of the cryptocurrency, without directly purchasing or holding Bitcoin yourself. It is important to note that investing in these companies also comes with additional risks and considerations, such as the performance of the company's core business and the regulatory environment for cryptocurrencies.

Invest in its infrastructure

Investing in Bitcoin companies and its infrastructure is a viable path for generating BTC and will lead to heavier emphasis on sats flowing back to investors. Investing in the Bitcoin ecosystem strengthens the network, driving increased adoption and value of the asset, which in turn attracts additional capital and supports further investment in infrastructure in a virtuous circle.

One of the most effective ways to earn bitcoin is to have equity stakes in Bitcoin companies. Investing in early-stage Bitcoin companies can offer 100x-plus return potential over a shorter time frame, unlikely to be matched by bitcoin over the same horizon. Investments in Bitcoin companies that earn and build bitcoin on their balance sheets also offer the opportunity to outperform bitcoin. As more companies successfully offer products and services desired by holders of bitcoin, these companies will eventually be paid in bitcoin, and bitcoin will accrue to their bottom line and strengthen their balance sheet. In this way, Bitcoin companies can in effect become leveraged plays on bitcoin.

Investing in Bitcoin companies can also enhance your bitcoin portfolio by offering returns that are disentangled from near-term price swings of bitcoin, balancing out the underlying volatility of the asset. Given the significant secular tailwinds expected over the coming decade as adoption continues, investing in early-stage Bitcoin companies can capture these benefits, regardless of shorter-term bitcoin price volatility.

For example, Ten31’s Low Time Preference Funds have investments in Bitcoin companies that have outperformed BTC's metrics over the same shorter-term time frames. While in many cases the value of private, illiquid company stock doesn’t move over these shorter periods, the point is that once valuations are updated upon such an event, it can crystallize returns in excess of bitcoin over the same period.

Exchange-traded funds

ETFs that contain Bitcoin are known as spot Bitcoin ETFs. These buy the cryptocurrency directly, "on the spot", at its current price, throughout the day.

The US has approved spot Bitcoin ETFs, which can be purchased by anyone from pension funds to ordinary investors. This means a new group of investors can now enter the speculative world of Bitcoin, without having to worry about getting digital wallets or navigating crypto exchanges.

However, ETFs that contain Bitcoin also come with their own risks. They do not always duplicate the price moves of the underlying digital token. They are also subject to the dramatic price swings of the crypto markets, which can be even more worrying if you are more accustomed to the lower volatility of more typical ETFs.

Some examples of spot Bitcoin ETFs include:

• Franklin Templeton Digital Holdings Trust (EZBC)
• Bitwise Bitcoin ETF (BITB)
• VanEck Bitcoin Trust (HODL)
• Ark 21Shares Bitcoin ETF (ARKB)
• IShares Bitcoin Trust (IBIT)
• Fidelity Wise Origin Bitcoin Fund (FBTC)
• WisdomTree Bitcoin Fund (BTCW)
• Invesco Galaxy Bitcoin ETF (BTCO)
• Valkyrie Bitcoin Fund (BRRR)
• Hashdex Bitcoin ETF (DEFI)
• Grayscale Bitcoin Trust (GBTC)

Bitcoin futures

There are a few benefits to trading Bitcoin futures. Firstly, they offer flexibility for non-Bitcoin holders to speculate on the price of Bitcoin and make quick profits. Secondly, Bitcoin futures contracts enable you to gain significant exposure to Bitcoin with only a fraction of its total cost. By using leverage, you can magnify relatively small price movements to generate profits. Additionally, Bitcoin futures are highly liquid markets, reducing the risk associated with trading. Finally, Bitcoin futures provide more options for portfolio diversification, allowing traders to develop sophisticated trading strategies such as short-selling, arbitrage, and pairs trading.

When considering trading Bitcoin futures, it is important to assess your risk tolerance and financial goals. While it provides an exciting opportunity, the market can be volatile, and it is crucial to understand the potential risks involved.

Cryptocurrency-related investment funds

• Crypto Exchange-Traded Funds (ETFs): These are tradeable on stock exchanges and hold crypto assets. ETFs offer an easy way to invest in a basket of cryptocurrencies without having to buy and store them individually. Examples include the Amplify Transformational Data Sharing ETF (BLOK) and the Bitwise 10 Crypto Index Fund (BITW).
• Crypto Index Funds: These funds passively track cryptocurrency indices, providing diversified exposure to the market. For example, the Bitwise 10 Index Fund (BITW) tracks the Bitwise 10 Large Cap Crypto Index, representing the 10 largest investable cryptocurrencies.
• Crypto Venture Capital (VC) Funds: These funds invest in early-stage blockchain and crypto projects, providing capital and resources for their growth and development. Examples include Andreessen Horowitz (a16z) and Coinbase Ventures.
• Crypto Hedge Funds: These are actively managed funds that seek to generate returns by trading cryptocurrencies. They employ sophisticated portfolio strategies and risk management techniques to optimise returns and protect against potential losses. Examples include Polychain Capital and Pantera Capital.
• Crypto Mutual Funds: These funds pool investor money and invest specifically in cryptocurrencies and assets tied to the cryptocurrency market. The Bitcoin Strategy ProFund (BTCF.X) is an example of a crypto mutual fund.

When considering investing in cryptocurrency-related funds, it is important to remember that the market is highly volatile and unregulated. Always do your own research and consult with a financial advisor before investing.

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