Wisconsin Public Radio

Wisconsin Pension Fund Owns More Than $100 Million in Bitcoin Assets

State of Wisconsin Investment Board purchased more than $160 million in new ETFs.

By , Wisconsin Public Radio - May 17th, 2024 04:40 pm
Cryptocurrency Medallions Alongside Wallet. Photo by CryptoWallet.com Images, CC BY 2.0 , via Wikimedia Commons

Cryptocurrency Medallions Alongside Wallet. Photo by CryptoWallet.com Images, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

Wisconsin’s pension fund has added bitcoin to its balance sheets, buying more than $160 million worth of shares in two newly approved funds earlier this year.

U.S. Securities and Exchange filings from the State of Wisconsin Investment Board show that between Jan. 1 and March 31, it bought just more than $99 million worth of shares in a bitcoin exchange-traded fund, or ETF, from investment juggernaut Blackrock. The Investment Board, known as SWIB, also bought about $64 million worth of another bitcoin ETF from Grayscale.

A spokesperson for SWIB told WPR it doesn’t comment on specific assets or acquisitions.

Marquette University Emeritus Associate Professor of Finance David Krause said there’s a distinction between buying bitcoin itself and buying shares of a bitcoin ETF. People can buy bitcoins directly and store them in a digital wallet, but Krause said to think of the bitcoin ETFs more like a mutual fund. He said shares of the ETF are tied to the price of bitcoin but investors don’t actually own the cryptocurrency. Bitcoin ETFs, like the ones bought by SWIB, were approved by the SEC on Jan. 10.

“These are traded on stock exchanges,” Krause said. “So, they have liquidity just like shares of stock. They’re also regulated by the Securities and Exchange Commission. That gives investors some confidence that they’re not dealing with directly buying an asset.”

While $160 million is a lot of money, Krause said it’s a small fraction of Wisconsin’s overall pension fund. At the end of December, SWIB held more than $155 billion in assets, with the vast majority of that representing assets in the Wisconsin Retirement System.

“Like any good portfolio manager, you want to diversify,” Krause said. “And now that bitcoin has been around for well over a decade, we’re aware that not only does it offer pretty strong returns — sometimes over periods of time quite phenomenal returns — but it also has diversification capabilities. It doesn’t move directly, in tandem with stocks and bonds.”

However, bitcoin is notoriously volatile. In 2021, the price of one bitcoin peaked at almost $66,000 before dropping to around $16,000 in 2022. This year, it hit a new high of about $71,000.

Krause said it’s a “big deal” for SWIB to get involved with the bitcoin funds because it’s considered one of the most highly regarded pension funds in the country.

“I can assure you that most institutional money managers took note of this,” Krause said. “Pensions magazine highlighted this just a couple of days ago that Wisconsin did this. So, I am pretty confident that just about everybody that runs large pension funds or institutional funds, is aware that SWIB took that action.”

Mark Fedenia, an associate professor of finance at the the University of Wisconsin-Madison’s School of Business, said the move gives “institutional validation for Bitcoin and cryptocurrency investments.” “SWIB’s investment may boost confidence among other pension funds regarding the legitimacy and potential of Bitcoin ETFs,” Fedenia said. “Seeing a well-regarded institution like SWIB take the plunge can alleviate concerns about volatility, regulatory risks and the overall investment thesis for Bitcoin.”

Bitcoin, which was created in 2009, is “mined” using high-powered computers to verify online transactions that use cryptocurrency. Bitcoin mines consume substantial amounts of electricity. Aside from it’s volatility, critics have pointed to power consumption, electronics waste and it’s use by criminal hackers as a form of payment following ransomware attacks.

In Wisconsin, some local communities have turned to bitcoin and other cryptocurrencies as a way to invigorate their local economies. In 2022, the owners of a rural hydroelectric plant in Jackson County partnered with New York-based Digital Power Optimization to start a cryptocurrency mine on Lake Arbutus.

Editor’s note: Employees of WPR are participants in the Wisconsin Retirement System.

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Wisconsin pension fund now includes bitcoin was originally published by Wisconsin Public Radio.

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3 thoughts on “Wisconsin Pension Fund Owns More Than $100 Million in Bitcoin Assets”

  1. Duane says:

    (from cryptonews.com)…

    “While SWIB is the first pension fund to disclose Bitcoin holdings publicly, political efforts are underway to see other states buy shares of the new Bitcoin ETFs as well.

    Late last month, Ohio state Rep. Steve Demetriou introduced pro-crypto legislation that would, among other things, require the state’s retirement systems to evaluate Bitcoin ETFs”.

    So, surprise,surprise, lobbying efforts are working to increase investment in Bitcoin, which Warren Buffet described as “probably rat poison squared,”

    What would be cool would be for SWIB to disclose a position in Trump Media & Technology Group (DJT). Would make about as much sense as investing in crypto.

  2. kaygeeret says:

    This stinks from where I sit.
    Aren’t they supposed to PROTECT the publics money?

  3. Colin says:

    Bitcoins are an ecological disaster and also nowhere near under enough supervision federally.
    It’s sad that WI is “investing” into this pump’n’dump scheme.

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