New Jersey Pension Invested $7M in Bitcoin Mining

[AmoreJaz]

Well, that's a really risky investment considering that bitcoin is a volatile investment especially using pension as a capital for the investment. I hope that the investment will be fruitful though and I think it will bear big profit because it might need some time.

$7m is not a penny mate, that amount is worth billions when you convert it to my local currency. They made choice because they would have made cost evaluation and revenue that can be generated yearly and tax deduction.
Bitcoin mining is profitable and provides high rate of investment that's why many countries with less power source cost involved on them.

most certainly, they did their math here. putting the pension funds to this type of market, you really should do your calculations here before plunging in. if they can show profits at the end of maybe at least a year in venturing this project, more then likely other govt pension funds institutions will follow their steps.
for those who have money in this institution, and you agreed to put your money to crypto investments, you should know also the risks involved. so maybe, look for other tangible investments, just to prepare for what's to come.

[lixer]

This seems to be the first time this cryptocurrency allocation has been made by the organization in New Jersey. Other government pension funds, especially in California, have been considering investing in shares of bitcoin mining companies in recent months.

That’s quite some risk that they are taking there, although I think the risk they have taken here is a less risk since they didn’t go straight to invest in Bitcoin, rather they invested in a bitcoin mining company, so there is more chances that they will make profit from their investment that they have made. Bitcoin mining is not really like when you’re investing directly into bitcoin, it’s completely when there is a huge money involved in it, there are more chances of making profit from mining of bitcoin.

So, I wouldn’t really say that they are taking much of risk. And I believe that a company that is as huge as that wouldn’t take a non-calculated risk, they will always make sure that they are moving rightfully.

[el kaka22]

I honestly do not think that investing into mining operations is better than investing into bitcoin itself. If I were given 7 million dollars and a chance to invest into something, instead of investing into mining companies, I would invest 4 million into bitcoin, 2 million into ethereum and 1 million into bnb and I am pretty sure that in the long run I will profit a lot more.

First of all no matter who much money you make from mining, eventually you will have to replace those items and buy something new, sure all these 3900 or whatever rigs could make you a lot of money if you could get your hands on it for cheap amount (retail price) but they are usually higher price in second hand (which is rare when second hands are considered) and bitcoin mining equipment are the same, because eventually better and better machines will come up and why would I want to spend that much to keep replacing old and broken ones with brand new ones using all the profits I made when I could simply buy coins itself and make a good profit.

[Kong Hey Pakboy]

Looks like they saw a vision of BTC in the future, but the sizable investment seems like they are taking a risk and continuing to use the mining that pollutes the environment for us, there needs to be some how to replace BTC mined in this kind of pollution model.

It's not as risky as many think because pension is a long-term investment so using the fund for bitcoin mining is pretty much a useful thing to do because you basically help in moving the money and at the same time growing the money in the process since bitcoin is an appreciating asset, what they just have to worry is the expenses for the electricity that they're going to use.

[AicecreaME]

The New Jersey State Pension Fund invested several million dollars in two large companies in the area, seeing the upward trend of cryptocurrency companies in the previous quarter.
The pension fund's capital management sector ended in June with an investment of $ 3.66 million in two blockchain companies (NASDAQ: RIOT) and a $ 3.39 million digital marathon holding (NASDAQ: MARA).
The New Jersey Joint Pension Fund has invested a total of $ 30 billion in the future of the state's employees.
This seems to be the first time this cryptocurrency allocation has been made by the organization in New Jersey. Other government pension funds, especially in California, have been considering investing in shares of bitcoin mining companies in recent months.
New Jersey Investment Division delayed responding to comment.


Source: https://www.coindesk.com/new-jersey-pension-invested-7m-in-bitcoin-mining-stocks-last-quarter

I wonder what percentage of their fund was invested in cryptocurrency. Was it over 5% of their holdings? I hope it was specified.

Nonetheless, millions of dollars being invested in cryptocurrency by a state institution is a risky move. Hopefully, they have analyzed and made an in-depth study before they did the investment, otherwise, it will really be a gamble most especially for the members of the state pension fund because their money is at stake there. If something goes wrong, their money will be gone in a snap. I am well aware that high risks, high rewards, but for a state fund I think it is not a wise move to use the assets of their members in risking with a highly speculative asset and a very risky investment. Crypto is volatile, one massive dump can have a great impact on them.

[fiulpro]

I remember few years back, I heard the news about pension funds investing in cryptocurrencies like Bitcoins. I do think this might go both ways, if the company looses everything and at the same time, they need to employee special people who are well versed with cryptocurrencies like bitcoins, plus they have to be extra careful right now since the market is super volatile.

The intentions of the New Jersey Pension Fund are clear, and they put their money wherever they are.  However, is there a reason that explains why they do not want to hold the asset?
 Many institutional investors find publicly traded Bitcoin miners an attractive investment because they want BTC exposure but prefer to hold securities over property due to tax, accounting, & business considerations.

At some places it's preferable to invest in Bitcoins due to lower tax rates and at the same time the good returns. In New Jersey, cryptocurrencies are however taxable and are considered asset, therefore it's definitely for the gains.

But I do not understand how profitable will the trading be?? I think holding for a long period of time would work out if the government does not create unnecessary restrictions and at the same time the Volatility is controlled. I think right now was a good option to invest undoubtedly.

[teosanru]

Well, that's a really risky investment considering that bitcoin is a volatile investment especially using pension as a capital for the investment.

This is a shitpost that I'm replying to, but you're right that it's risky.  However, I just took a look at the stocks in question (RIOT and MARA), and it looks like they've been performing pretty well since their inception.  And I thank OP for linking to the article and mentioning those stocks in his post, because I had no idea those two companies even existed and put them on my watchlist.  Investing in either one of them would be a great way to get some "mining exposure" without actually having to invest, run, and maintain all the equipment necessary to mine bitcoin yourself.

Looks like Marathon Digital Holdings is out of Las Vegas, NV but mines in North Dakota--smart, because I can only imagine how much cooling they'd need if the mining was being done in Las Vegas.  North Dakota, on the other hand, is known for its frigid temperatures. 

I have to say, I'm also kind of surprised that a pension fund would buy stocks like these, but if they're administering 401k's (and I don't know that they are), some participants may want high risk/high return investments.  In any case, this is pretty cool!

Exactly my biggest question. If pension funds that are supposed to be the safest are investing into stocks like these it's must be crazy, that participants are still holding it. But Actually, the total investment made by them in these shares is less than even 0.25% of their total AUM which means, even if these companies go bankrupt it still won't be a big loss to the fund in total. A 0.25% stake can be easily hedged too, so it's really not a big risk.
Secondly, I went through the Investor presentation of both the companies, apparently, both of them are expecting their future growths from primarily just one hope, that renewable energy sources will increase in the future, making power cheaper and mining more environment friendly.

What I feel is that this fund wanted to buy bitcoin but couldn't do it so ended up buying these stocks because they pretty much replicate the bitcoin price movement.

[SquallLeonhart]

I really think that investing into companies is what pensions do anyway, this is more about accounting than specifically about crypto. If you find a company dealing with animal shit (literally manure company) but the finances looked awesome, wouldn't you invest? Does that mean you like what they are selling? Of course not, you just like the companies' finances and it looked like a profitable business deal for you.

This means that new jersey pension didn't really much care about crypto, or at least didn't have to, they look at the books of two companies they seem to like and realized it is a good investment for the future that could keep on growing bigger and bigger. That is why I honestly believe that we should not be looking into profits at specific companies like it matters in which sector they are, when investing only care about how much profit you can make.

[KennyR]

Thats a big step forward investing into two companies, that too with a big sum of money. This move is really profiting, and the positive note out of this decision will surely make more other pension funds to be invested on cryptocurrency related ventures.

This will benefit the pension fund to grow and the same will benefit the pensioners as well. I find more good about it, than keeping the large funds idle. The risk is high, but the same is generating good money as they're trying to play a secure move in the market.