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What’s a bitcoin ETF?

And why should I care?

There’s been some big news on the bitcoin front this week!

First, we just launched green bitcoin, the world’s very first climate positive way to trade bitcoin. For every bitcoin bought on our platform, we’ll offset enough trees to make that bitcoin completely climate positive—and then some.

Mining a bitcoin produces about 421,000 lbs of CO2. When you buy bitcoin with us, we plant trees that can suck up 500,000 lbs of CO2 in their lifetime, in order to offset all of the bitcoin traded on our platform. That makes your investment in crypto climate positive. Want in?


BUY GREEN BITCOIN


But enough about us! (Kidding, we’ll probably talk more about us later.)

The other big bitcoin news this week is the first ever trading of a bitcoin exchange-traded fund (ETF). Why does this matter, and how might it impact you? We’ll tell ya.

What’s a Bitcoin ETF?

A bitcoin ETF is a very first of its kind fund traded on the stock market.

A bitcoin ETF is a very first of its kind fund traded on the stock market. This ETF, ProShares Bitcoin Strategy ETF (ticker: BITO), tracks the price of bitcoin. So if bitcoin’s price goes up, the value of BITO will go up too. If bitcoin tanks, so too will BITO.

Before we go any further, you should know: we talk a lot about BITO in this article because it’s the very first of its kind—but you should know that doesn't mean we endorse or support BITO. If you choose to invest, you must do your own independent research to be sure any investment is right for you.

BITO enables investors to buy into the ETF without actually buying any bitcoin themselves.

ETFs can be very powerful tools for investors. They may track a single asset or a basket of assets, and they allow investors to diversify their portfolios without actually purchasing and owning the assets which the ETFs track.

That’s the crux: BITO enables investors to buy into the ETF without actually buying any bitcoin themselves.

This is big news because BITO is the first of its kind. It’s also big news because on its first day of trading, it posted an estimated turnover of $1 billion. This makes it the second highest debut trading day ever, second only to a BlackRock carbon fund.

What does that high turnover mean? It could mean people are interested.

How is a Bitcoin ETF Different Than Bitcoin?

The biggest difference between BITO and bitcoin is that, well, BITO isn’t a cryptocurrency; it isn’t bitcoin.

The biggest difference between BITO and bitcoin is that, well, BITO isn’t a cryptocurrency; it isn’t bitcoin.

Bitcoin is a cryptocurrency which operates on the blockchain, where using specific platforms, coins can be bought, sold, used for transactions, gifted, or donated. You need to store your bitcoin in a very secure place, like a cryptocurrency wallet .

The bitcoin ETF is an entirely different financial instrument. The ETF isn’t bought or sold on the blockchain; rather, it’s traded on stock exchanges, like the New York Stock Exchange. Instead of using a platform and a purpose built crypto wallet, you might just use your normal stock trading app or ask your broker to buy in for you.

People may be interested in BITO because it may seem like a simpler instrument to many people. It can allow buyers to side step the security procedures and storage requirements that come about when buying real bitcoin.

The ETF also means that investors could feasibly short sell their shares if the price of BTC seems like it may fall.

Should I Invest in a Bitcoin ETF?

Whether or not you should buy bitcoin, BITO, or neither completely depends on your investment needs, risk appetite, and strategies.

If you’re looking for a way to get in on bitcoin’s performance (it’s the best performing asset of the last decade according to a March 2021 study, just FYI) but hesitant to get into buying and selling (and storing) cryptocurrency, an ETF could be right for you. Bear in mind you could be subject to trading and management fees, though.

If you’ve done your research and decide you want to dabble in bitcoin, you can buy and sell bitcoin on our platform super easily for a low fee.1

And if you’re environmentally conscious, you can feel good about purchasing bitcoin with Mogo. With our green bitcoin, your investment can actually have a net positive impact on the climate. Seriously. You can invest as little as $1.00CAD, and at the end of the day, you’ll have some satoshis (small amounts of bitcoin) and a tree planted in your honour. Cool!

And lastly, if all this jargon seems like a whole lot of nonsense to you, then don’t worry about either option!

Green Bitcoin Revolution

A serious barrier to a widespread uptake of cryptocurrency (bitcoin especially!) is the environmental factor. Every year, BTC uses the same amount of energy as a small country, like Sweden—including the daily lives of its 10 million+ residents. By committing to full carbon offsets (and then some), we’re able to make all bitcoin purchased through our platform climate positive.

That means, if you choose to invest in bitcoin, you can do so and feel good about helping the planet.

After all, what’s the point of it all if the world’s on fire? 🙃

We’re stoked to welcome you to the future of bitcoin. Get signed up here, and let’s goooo!


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This blog is provided for informational purposes only and is not intended as investment advice, and is not meant to suggest that a particular investment or strategy is suitable for any particular investor. If you’re unsure about an investment, you may wish to obtain advice from a qualified professional. Nothing herein should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Buying and selling bitcoin is risky and you may suffer losses. The price of bitcoin is highly volatile and speculative and so you should never invest more in bitcoin than you can afford to lose. It’s also important to remember that past performance is no guarantee of future results. Mogo will offset the approximate carbon footprint generated from mining the maximum aggregate number of bitcoins held on its platform at any given time (as determined from time to time).

1-The exchange rate we offer you on a buy or sell transaction of cryptocurrency is calculated from our Exchange Partner's price, which may include fees or mark-ups applied by our Exchange Partner and/or other factors such as market depth and volatility, and includes a 1% fee charged by us. You can check the exchange rates we offer for cryptocurrency purchases and sales at any time from within the MogoAccount.

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