Invest in the Digital Assets Transformation
January 28, 2025
Read Time 2 MIN
Please note that VanEck has positions in MicroStrategy and Block Inc.
The digital transformation is underway. In recent years, digital assets have started to mature, evidenced by increased global adoption by both retail and institutional investors. Against this backdrop, we believe that companies involved in the digital transformation of the global economy represents a long-term structural growth opportunity that is becoming more and more accessible to investors.
What Are Digital Assets?
The term “digital assets” encompasses a broad range of technology and applications, commonly referred to as blockchain or distributed ledger technology. Digital assets can take a variety of forms, and are not just limited to cryptocurrencies.
Companies at the Forefront of the Digital Asset Transformation
The companies involved in the digital transformation are distinctly different from digital assets themselves. Digital transformation companies may range from digital asset mining to hardware to exchanges that facilitate the trading of digital assets.
Digital transformation companies may engage in only one of these business lines, or they may engage in multiple, depending on their goals, capabilities and focus within the broader digital transformation space. Below are two quick examples to illustrate how different companies are generating digital transformation-related revenues.
MicroStrategy* (MSTR), a business intelligence software firm, has strategically invested in Bitcoin to enhance its treasury holdings. As of January 13, 2025, the company holds approximately 450,000 bitcoins, acquired for $27.533 billion at an average price of $62,691 per bitcoin.1
Block Inc.* (XYZ), the top weighted payment gateway company in the MVIS Global Digital Assets Equity Index, helps sellers start, run and grow their businesses. Investors and consumers can purchase cryptocurrency on Block’s popular CashApp. In 2020, that amounted to $2.43 billion in bitcoin-related revenues.2
Digital Transformation Companies Reflect a Structural Growth Opportunity
The opportunity set of publicly traded, pure-play digital transformation companies is still young, but has grown in both size and revenues over the last few years. Despite underlying volatility in digital assets themselves, many publicly traded companies are investing heavily in new business lines to position themselves favorably as digital asset usage and adoption continues to accelerate.
The Growth of Publicly Traded Digital Transformation Companies (2012 – 2023)
Source: VanEck. Revenues and market caps reflect pure-play digital asset companies as defined by MVIS and included in the composition of the MVIS Global Digital Assets Equity Index on 12/31/2023. See important disclosures and index descriptions at end.
The digital transformation opportunity set currently has fewer listed companies compared to more mature industries. However, we believe that as digital assets use cases and adoption grow over time, these early-mover companies may benefit, and that more digital transformation companies will go public.
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DISCLOSURES
* MicroStrategy and Block were the top two holdings in the MVIS Global Digital Asset Equity Index on 1/23/25.
1 Source: https://treasuries.bitbo.io/microstrategy.
2 Source: https://cointelegraph.com/news/block-q3-earnings-bitcoin-revenue-stagnates-shares-drop-revenue-miss.
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and the companies that invest in them, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 Companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
© Van Eck Associates Corporation
Related Funds
DISCLOSURES
* MicroStrategy and Block were the top two holdings in the MVIS Global Digital Asset Equity Index on 1/23/25.
1 Source: https://treasuries.bitbo.io/microstrategy.
2 Source: https://cointelegraph.com/news/block-q3-earnings-bitcoin-revenue-stagnates-shares-drop-revenue-miss.
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and the companies that invest in them, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 Companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
© Van Eck Associates Corporation