Norway’s Sovereign Wealth Fund Ramps Up Indirect Investment in Bitcoin

Key Takeaways

• Norway's sovereign wealth fund has increased its exposure to Bitcoin via investments.
• The government has been buying stocks of companies directly exposed to Bitcoin, including MicroStrategy and Coinbase.
• Every Norwegian indirectly owns approximately $25 worth of Bitcoin.

Norges Bank Investment Management, the manager of Norway's Government Pension Fund Global (GPFG), also known as the Oil Fund, has increased its exposure to Bitcoin. This move indirectly expands the fund's stake in the cryptocurrency sector, further solidifying its position in the digital asset market. 

Norway's Growing Bitcoin Stash: A $142 Million Surprise

K33Research senior analyst Vetle Lunde highlighted this move in a recent post, explaining that Norges Bank Investment Management fund indirectly holds approximately 2,446 BTC ($142.9 million). This translates to $25.98 per capita for each of Norway's 5.5 million citizens. At press time, Bitcoin is trading at $98,473.74 .

The Norwegian sovereign wealth fund (NBIM) indirectly owns 2,446 BTC, an increase of 938 BTC from December 31, 2023.

The growth likely originates from pre-determined algo-based sector weighting and risk diversification. It's unlikely to stem from an intentional choice to amass… pic.twitter.com/8HBIbemgNU

— Vetle Lunde (@VetleLunde) August 14, 2024

Norges Bank manages over $1.4 trillion in assets and has been actively diversifying its portfolio to include companies directly exposed to Bitcoin, such as Coinbase, MicroStrategy, and Marathon Digital. 

These companies all hold a large amount of Bitcoin in their treasuries. For instance, MicroStrategy holds 226,500 Bitcoins in its treasury.

According to Lunde, the recent increase in Norges' investments in Bitcoin-facing companies could be linked to the fund's pre-determined algorithm-based sector weighting and risk diversification strategy rather than an intentional decision to accumulate more exposure to the cryptocurrency.

“Regardless, it perfectly illustrates how bitcoin is maturing as an asset and getting woven into any well-diversified portfolio!” Lunde wrote.

This strategic decision to increase exposure to Bitcoin reflects a broader trend of institutional adoption and positions Norway as a significant player in the European crypto market. 

The fund's crypto investments are part of its ongoing efforts to adapt to the evolving financial landscape while securing long-term returns for the Norwegian people. 

Could Bitcoin Adoption Rise in Bitcoin?

Norway has seen a significant increase in cryptocurrency adoption, with the number of Norwegian cryptocurrency owners rising from 8% in 2022 to 10% in 2023.

This upward trend continued in 2024, as a new survey conducted by the Norwegian Central Bank found that 11% of the population now holds crypto assets. The total value of these assets is estimated to be around $3.5 billion, indicating substantial growth in the country's cryptocurrency market.

The Norwegian Central Bank estimates Norwegian crypto holders amounts to 11% of the adult population. That's 2% up from 1 year ago. 15% have been holders "at some point". They also estimate crypto holdings among the population to amount to ~$3.5 bn. (pop = 5.55m)

Study #Bitcoin pic.twitter.com/9gyUY7Fnfs

— Alexander Ellefsen⚡️ (@4lexEllefsen) June 5, 2024

While Norges Bank Investment Management's decision to increase its Bitcoin holdings is a promising sign for broader adoption, the future of crypto operations in Norway remains uncertain. The crypto community remains concerned about the government's stance on Bitcoin mining, which could hinder the industry's growth.

NORWAY IS GOING TO BAN BITCOIN MINING WITHOUT PUBLIC CONSULTATIONS –
WE NEED TO ACT NOW

Norway's Ministry of Digitalisation and Public Administration responded to @ODFoundation that it "has no plans to conduct a public consultation" on a ban on cryptocurrency mining.

There is… pic.twitter.com/Ff83ZWZiAy

— Lyudmyla Kozlovska 🇪🇺🇺🇦 (@LyudaKozlovska) August 5, 2024

In April 2024, Norway’s government introduced a law aimed at regulating data centers, which could effectively block energy-intensive crypto mining.

This legislation mandates official registration from all data centers in the country, including information about the owners and leaders of these centers and the type of digital services they offer.  By extension, this means more scrutiny for Bitcoin miners in the country, as some legislators claim they don't want crypto mining in the country. 

In fact, some lawmakers have explicitly stated their desire to ban crypto mining in the country. Norway's Minister for Energy, Terje Aasland, has been vocal about his opposition, citing environmental concerns. “It is associated with large greenhouse gas emissions and is an example of a type of business we do not want in Norway,” Aasland argued.