Summary The Schwab Crypto Thematic ETF is heavily concentrated in Bitcoin mining stocks, diverging from its stated broad crypto exposure objective. STCE's construction methodology allows inclusion of companies with minimal or no true crypto or blockchain exposure, undermining thematic purity. Over 60% of STCE's assets are allocated to Bitcoin miners, whose long-term profitability is structurally challenged by declining mining rewards. I do not recommend STCE as currently constructed, citing poor alignment with the crypto theme and excessive mining exposure. With the increasing acceptance of digital assets on Wall Street and among the broader investment community, there has been an increase in ETF products aimed at providing investors exposure to 'crypto,' 'blockchain,' and the businesses that benefit from such things. One of those products is the Schwab Crypto Thematic ETF ( STCE ), which launched back in 2022. In this article, I'll provide the details and objective of the fund, how it is constructed, and what I see as the major drawbacks. Schwab Crypto Thematic ETF Inception: 8/03/22 AUM: $307 million Expense Ratio: 0.3% Dividend Yield TTM: 0.39% As a passively managed fund that is rebalanced on a quarterly basis, STCE aims to offer investors a way to buy crypto-exposed businesses and blockchain-based businesses as a broad theme. It does not buy cryptocurrencies directly. Rather, the fund is entirely allocated to equities. No less than 80% of the fund's assets are to be invested in the theme at any one point. If the name of this fund isn't straightforward enough, this is what the listed investment objective is from the summary prospectus: The fund ' s goal is to track as closely as possible, before fees and expenses, the total return of an index that is designed to deliver global exposure to companies that may benefit from the development or utilization of cryptocurrencies (including bitcoin) and other digital assets, and the business activities connected to blockchain and other distributed ledger technology . The bold in the quote above is my emphasis, and I think it's important to point this out because I think STCE is falling well short of achieving that goal. The fund utilizes search terms for relevance to the crypto theme rather than more traditional index weightings. Schwab acknowledges that this could result in companies being included in the fund that don't actually fit with the theme at all: Using a natural language algorithm may result in the index including companies that would not be classified by a more traditional index methodology as a company within the Theme, that do not have material exposure to the Theme based on profits, revenue or other financial metrics, or that have significant business operations or lines of business unrelated to the Theme. This means that the operating results of companies included in the index may not be tied economically to the Theme . Bold again, my emphasis. Given this, it's perhaps no surprise, then, that there are indeed several examples of equities with essentially no exposure to crypto or blockchain that have found their way into the fund. For instance, STCE has exposure to NVIDIA ( NVDA ) and Customers Bancorp, Inc. ( CUBI ), but not companies like Circle Internet Group ( CRCL ), Fold Holdings ( FLD ), or eToro ( ETOR ). What it does have, however, is an enormous amount of exposure to Bitcoin ( BTC-USD ) mining stocks. Holdings Data Number of Holdings: 43 Top 10 Exposure: 60.8% Turnover: 60% For the number of equities that are included in STCE, I was very surprised to see how concentrated the fund is in Bitcoin mining stocks. Glancing at the top 10 holdings for STCE, we can identify 8 companies that mine as a core business segment as well as an ASIC manufacturer. Even Galaxy Digital ( GLXY ), which I consider to be the only company in the top 10 that isn't essentially a mining pureplay, has a mining segment. Top Ten Holdings Weight Cipher Mining Inc. ( CIFR ) 13.96% IREN Limited ( IREN ) 7.70% Bitfarms Ltd. ( BITF ) 6.68% Hut 8 Corp . ( HUT ) 5.69% HIVE Digital Technologies Ltd . ( HIVE ) 5.15% Galaxy Digital Inc. 4.97% CleanSpark, Inc . ( CLSK ) 4.74% Bitdeer Technologies Group ( BTDR ) 4.23% Core Scientific, Inc. ( CORZ ) 3.88% Canaan Inc. ADR ( CAN ) 3.85% Source: Seeking Alpha, as of 12/9/25 The top 10 stocks in STCE account for 60% of the fund's holdings. Coinbase ( COIN ) gets just a 3.5% weighting. Even Strategy ( MSTR ), which I'm not a fan of at this point , only has 1.8% exposure through STCE. Each of which seems quite low for a crypto thematic ETF. If we go even further down the holdings list, we find an additional 8% combined exposure to MARA Holdings ( MARA ), Riot Platforms ( RIOT ), and Applied Digital ( APLD ). So, again, well over half of the fund's assets are committed to Bitcoin mining companies. I'm not opposed to Bitcoin mining exposure as an idea; I just think the fund is constructed poorly since it has so much of it. Bitcoin Mining Profitability As I've laid out for years at this point, Bitcoin mining stocks are really not very good investments long-term without a robust fee market underpinning Bitcoin's network, which it doesn't currently have. Thus, every four years the block reward is cut in half, and BTC-denominated mining rewards go down by 50%, all else (price, hash rate) being equal. Bitcoin Hashprice ( Hashrate Index ) There can be no doubt that Bitcoin profitability is problematic long-term. As of article submission, hashprice has been under $40 PHS/Day for nearly a month. For most of the summer, hashprice was somewhere between $50 and $60 PHS/Day. And even that was not all that great relative to where mining profitability was before April 2024. For historical context, it was rare for hashprice to be below $300 PHS/Day during the 2021 bull run. The point is, even while Bitcoin's price has obviously appreciated considerably since 2021, miners have seen their profitability numbers get absolutely slashed. Thus, my view is STCE holders should want less Bitcoin mining exposure and more exposure to companies like Coinbase, Block, Inc . ( XYZ ), or even Strategy. Closing Summary If I haven't made it clear enough, I don't care for the Schwab Crypto Thematic ETF at all. I think investors can do a better job allocating investment capital to the 'crypto' theme entirely on their own. Furthermore, despite making their money from Bitcoin mining, the fund's top three holdings are arguably rallying on AI/HPC hopes rather than anything pertaining to crypto or public blockchain ledger technology. As currently constructed, STCE is not a fund that I would recommend or consider buying. If the methodology changes in the future, I'll revisit it.
