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CME Group Explores Bitcoin Mining to Boost Profits for Shareholders

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Christina Comben | Mar 27, 2020 | 06:25

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CME Group Explores Bitcoin Mining to Boost Profits for Shareholders

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Christina Comben | Mar 27, 2020 | 06:25


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There’s never a dull day in the cryptocurrency world. The latest curious proposal to come out of the space is from an unlikely candidate. A nominee for CME Group’s board of directors Dante Federighi wants the company to start mining Bitcoin.


CME Group ‘Needs to Get in Front of This Trend’

One might not immediately see the link between the established derivatives trading marketplace and a Bitcoin mining farm. After all, China currently holds the majority of hash power at around 65%

It may seem less a case of “getting in front of the trend” than scrambling to play catch-up. Let’s not forget, China has plenty of access to cheap power and mining expertise. It’s not that simple to just open a profitable mining farm, especially amidst today’s competitive mining climate.

That doesn’t appear to deter Federighi, however, who has a background in investing in the energy industry.

The co-founder of Fortezza Forza RMC Fund LLC detailed his plans for CME’s growth in an open letter to shareholders filed with the SEC this week. He said that mining Bitcoin and other cryptocurrencies would allow the Group to create an additional revenue stream for its shareholders:

Some of our largest investors, i.e. BlackRock, are shifting investments to companies focused on creating value for all their stakeholders… The CME Group needs to get in front of this trend by building solar/wind/hydro energy plants to power our global operations. Then divert the excess energy to mine Bitcoin and other crypto currencies.

Bitcoin Mining Not Outside of CME’s ‘Core Competencies’

As one of three nominees for the CME Group’s Class B-2 director, he pointed out that CME Group should look to investing in new business lines such as energy plants. This would work out to the benefit of shareholders since the excess energy could be used to mine cryptocurrency.

This, Federighi argued, could be quickly converted into fiat by CME Group drawing on its ability to “match and clear trades.” He admitted that mining Bitcoin may seem a little outside of CME’s usual operations, however, he argued:

While this seems outside of our core competencies, I’d argue this is our business: we, like the miners, match and clear trades. We’d immediately converted any newly minted crypto into fiat… The net-net is another new revenue stream for shareholders; deep knowledge in new technologies changing the global exchange landscape for the CME; and increased allocation to ESG-focused businesses by investors. That’s a win-win-win.

Is This Bullish for the Crypto Space?

A major institutional player in the U.S. looking to expand into Bitcoin mining would certainly seem to be a bullish indication for the space. However, it remains to be seen if Federighi will be elected to the board–and whether his plan has been thought through well enough to compete in this challenging industry.

Do you think CME stepping into mining is bullish for Bitcoin? Let us know your thoughts below!


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