Carbon-neutral Bitcoin funds gain traction as investors seek greener crypto
Cryptocurrency is a brand new and exciting topic for most people but it is also a wild west of sorts. With no rules or regulations, cryptocurrencies have exploded in popularity over the last few years.
As Bitcoin adoption and interest continues to grow, so does the potential for sustainable investments in the cryptocurrency space. Carbon-neutral funds are one of the latest efforts to reduce environmental impact of cryptocurrency investment.
A carbon-neutral Bitcoin fund that invests in green technology is gaining traction in the cryptocurrency markets. The fund promises to keep its profits — or losses — from the now carbon-neutral cryptocurrency out of the atmosphere. It was launched in December by a company called TSenturion, a company that builds carbon-neutral data centers.. Read more about carbon neutral crypto mining and let us know what you think.
Bitcoin (BTC) has been a hot topic lately, even for people outside the traditional crypto community, but unfortunately not for the best of reasons. In particular, the amount of energy required to mine bitcoin has raised concerns among investors who saw bitcoin as a diversification opportunity. According to the Cambridge Centre for Alternative Finance, bitcoin currently consumes about 110 terawatt hours per year. The Harvard Business Review article goes on to say that this is equivalent to 0.55% of the world’s electricity production, or about the size of a small country. While this is true, it is important to note that any industry that adds value to society is likely to have an effect on the environment. However, with the rise of global warming and other environmental issues, it has now become critical for the cryptocurrency industry to recognize the energy consumption required to mine bitcoin. If this problem becomes a reality, individual members of the cryptocurrency community could come up with solutions to combat it in the future.
Green solution of the day: Climate-neutral bitcoin funds
Influential cryptocurrency leaders and investors such as Elon Musk and Michael Saylor continue to highlight bitcoin’s energy problems on Twitter to raise awareness about bitcoin’s future. Recently, Musk and Saylor announced the creation of the Bitcoin Mining Council, which is made up of several industry leaders who will ultimately ensure sustainable bitcoin mining initiatives. While this is a step in the right direction, it may be years before the Bitcoin Mining Council can have any real impact. Jesse Morris, chief commercial officer of Energy Web – a blockchain protocol designed to facilitate the development of applications for the energy sector – told Cointelegraph that while what Musk and Saylor tweeted about the new Bitcoin Mining Council was encouraging, action needs to be taken immediately. Morris explained that Energy Web is currently working directly with a number of Bitcoin miners to develop software that uses blockchain technology to determine the carbon footprint of the Bitcoin network in real time. Mr. Morris noted: I would love to see the Bitcoin community move to a better consensus mechanism, but I don’t think that’s going to happen, so we need to find a solution now to eliminate the proof-of-work consensus problems. Morris also believes that a greener Bitcoin network can be launched in the near future through the development of carbon-neutral exchange traded funds. While carbon-neutral ETFs may seem like a foreign concept, some investment managers have already taken steps in this direction. For example, Ninepoint Partners LP, based in Toronto, is an independent investment management firm with approximately $6.5 billion in assets under management. Alex Tapscott, managing director of digital assets at Ninepoint, told Cointelegraph that bitcoin makes up a significant portion of the firm’s assets under management. Crypto assets are an important and fast-growing asset class for us, he said. Ninepoint founded the Bitcoin Trust, which went public on the Toronto Stock Exchange in January of this year. The Bitcoin Trust was founded on the 6th. May in an ETF. When Tapscott heard about Ninepoint’s bitcoin ETF, he explained that the company had decided to offset 100% of its fund’s carbon footprint to provide interested investors with an environmentally friendly exposure to bitcoin: By taking care of the cost of bitcoin’s carbon footprint, we offer investors an environmentally friendly approach to bitcoin. We believe this is a unique and important offer that will help convince still undecided investors to buy bitcoins. According to Tapscott, Ninepoint is working with a number of initiatives to ensure the bitcoin ETF is environmentally friendly. For example, Ninepoint has partnered with the Crypto Carbon Ratings Institute, a research firm that studies the environmental impact of cryptocurrencies, and CarbonX, a fintech company that develops environmental software. Lena Klaassen, co-founder of the Crypto Carbon Ratings Institute, told Cointelegraph that the company uses proprietary methods and research to calculate the best estimate of the Bitcoin network’s actual carbon footprint. At CarbonX, the Cryptocurrency Ratings Institute reports to Ninepoint on the ETF’s share of the bitcoin network. CarbonX then uses its Zerofootprint practice, which produces equivalent amounts of CO2e, or carbon dioxide equivalent, to offset the pollution. Tapscott could not disclose specific figures on the fund’s carbon footprint, but explained that this is mainly because assets under management fluctuate as new investors join and the price of bitcoin changes. The energy requirements of bitcoin vary depending on the hash rate. It’s a moving target that we adjust each month to reflect these changes, he said. Despite the volatility of the market and the fact that the cost of offsetting the carbon footprint is fully funded by Ninepoint, Tapscott said the company is confident that this is the right decision for both the future of the company and the cryptocurrency industry as a whole. Tapscott said: Many investors want access to bitcoin but have questions about its energy footprint, especially institutions with environmental, social and governance (ESG) objectives.
Green funds – a lasting trend?
While there are still very few investment firms dedicated to managing crypto assets to go green, the efforts of some could well start a strong movement. Shortly after Ninepoint announced a green bitcoin ETF, One River Digital Asset Management filed for a carbon-neutral ETF. One River declined to comment to Cointelegraph, but Tapscott said he hopes Ninepoint’s green initiative will set an example for the industry as a whole. While it is difficult to predict the future of the crypto space, it is encouraging that BitMEX, a crypto derivatives trading platform, also recently announced its decision to become carbon neutral. In addition, Marathon Digital Holdings, a US bitcoin mining company, announced that it aims to achieve 70% carbon neutrality. Klaassen added that the Cryptocurrency Ratings Institute is now seeing a trend of BTC mining companies – especially those traded on an exchange – rating their own problems on a scale of 1, 2 and 3 to solve the problem. Paul Brody, senior blockchain specialist at Ernst & Young, also told Cointelegraph that carbon-free mining is entirely possible. If you want to mine bitcoins only in a carbon-neutral way, you have a green solution, he said. However, Brody noted that when someone makes a transaction with bitcoin, they cannot be sure that the transaction will be processed by a carbon-neutral miner. Brody said: You cannot know the history of these transactions. But if you combine carbon-neutral mining with some degree of carbon offsetting through other transactions, you’re likely to get a largely green bitcoin.
As bitcoin ETFs, investment managers and mining companies continue to make promises to become carbon neutral, a long-term solution is needed to make green bitcoin a reality. In the long run, Morris says, agreements that meet formal standards are needed. To ensure this, Energy Web recently launched the Crypto Climate Accord, which Morris says has 45 supporters consisting of miners, crypto investors, funds, exchanges and more. The goal of the agreement is to make bitcoin fully sustainable by focusing on two aspects. Morris noted that the agreement is intended to raise awareness of greenwashing. Morris says there is skepticism about crypto-only funds because blockchain networks that don’t use traditional proof-of-work consensus don’t consume as much energy as bitcoin. That’s why Morris thinks the energy-saving debate should be specifically about bitcoin. Morris also said the Crypto Climate Accord will take steps to help large institutional and retail investors green their bitcoins by bringing radical transparency to the Bitcoin network. However, one of the remaining challenges is the development of standards. According to Morris, Energy Web is currently exploring the possibility of developing a global standard for tracking Bitcoin’s carbon footprint. Moreover, the crypto-currency community should constantly strive to find an environmentally friendly solution for bitcoin. Bill Tapscott, COO of CarbonX, told Cointelegraph that if the path to carbon neutrality is set, the cryptocurrency community itself must take responsibility for transitioning to a more carbon neutral world.The cryptocurrency financial markets have been heating up as investors seek greener pastures and a more stable return on their investments. The rise of a new form of digital currency, namely carbon-neutral Bitcoin funds is bringing some stability to the new market as it is slowly being accepted by more and more investors.. Read more about carbon credit bitcoin and let us know what you think.