Chapter 3 : Themes in focus
The companies of the digital economy
Grayscale recently entered the European ETF market with the launch of the Grayscale Future of Finance UCITS ETF ( GFOF ) in May
Grayscale believes the digital economy represents the future of finance . By the digital economy , we are referring to the work of companies innovating at the intersection of finance , technology and digital assets . Together , these firms are heralding a new era of online trust , reshaping business models , reorganising competitor dynamics and redistributing value across industries – in the process , creating greater utility for consumers .
Broadly speaking , these companies fall into seven subsectors of interest , which we will take a closer look at below .
Exchanges and brokerages serve as platforms for customers to buy , sell , send , earn and store digital assets . Increasingly , platforms like Coinbase have started offering eCommerce alternatives to traditional payment methods for SMBs and micro-merchants , which comprise ~ 55 % of net revenues flowing to merchant acquirers / processors .
The platforms also connect
individuals and businesses to Decentralised Finance ( DeFi ) services and provide a marketplace for tradeable digital goods . Global banking revenues were $ 5.5trn in 2019 . Exchanges are positioning themselves to compete across a range of consumer and commercial diversified banking services .
Hardware providers enable enterprises to build trust in the speed and security of distributed cloud networks . This hardware is increasingly contributing to the growth of IoT applications , like smart homes and agriculture . Hyperscale data centers are expected to spend ~$ 55bn in cloud-related CAPEX in 2022 . Continued adoption of distributed computing technology could give hardware providers the
Digital asset miners operate a globally distributed infrastructure of data centers that support blockchain networks , earning revenue from newly issued digital asset supply and fees paid by users . Revenues from bitcoin and ethereum miners alone grew to ~$ 35bn , compared to revenues of ~$ 90bn for infrastructure-as-aservice companies .
Like cloud providers , miners achieve high EBITDA margins , but trade at significantly lower multiples ( i . e . Marathon trades at 7.2x ), due in part to volatile prices . By demonstrating consistent revenues from fees over time , miners may well experience a significant rerate in line with traditional cloud companies , like Equinix , which trades at 24.2x .
18