Fidelity has revealed that the $2 trillion money manager has been mining Bitcoin and Ethereum for three years, with the goal of learning about the cryptocurrency market. Similarly, JP Morgan has begun handling customer orders for crypto instruments, and Goldman is rumored to be considering opening a crypto trading desk.
“Think of it as an experiment. The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” says Stern, referring to aspects of the mining process, which involves a network of computers competing to solve complex math problems. Stern adds that Fidelity’s mining project is not sophisticated compared to professional operations, which involve companies, most of them in China, connecting giant rooms of specialized computers to cheap sources of electricity. But he says Fidelity continues to learn valuable lessons, including about recent campaigns by miners to create so-called “forks” in blockchains, which serve as an immutable record of all cryptocurrency transactions. (The most famous fork occurred this summer when some miners created a rival to bitcoin called “Bitcoin cash.”)