Cryptocurrency News

Carbon-neutral bitcoin funds gain traction as investors seek green crypto



Bitcoin (B T c) Has also been a hot topic of discussion recently for people outside the core crypto community, but unfortunately, it is not for the best reasons. In particular, the amount of energy required to mine bitcoin is Created concern for investors Who were considering BTC as an alternative to diversification.

According to the Cambridge Center for Alternative Finance, bitcoin is currently Consumed Approximately 110 terawatt-hours per year. A Harvard Business Review Article It further noted that this is equivalent to 0.55% of global electricity generation, which is roughly equivalent to a small county.

While this is the case, it is important to point out that any industry that adds value to society can have an environmental impact. Yet today with the rise of global warming and other environmental concerns, it has become important for the crypto sector to recognize the amount of energy consumption required for a bitcoin mine. As this concern is brought to the fore, individuals within the cryptocurrency community can come up with solutions to counter this challenge going forward.

Today’s Green Solution: Carbon-Neutral Bitcoin Fund

Influential executives and crypto investors such as Elon Musk and Michael Sayler continue to highlight the energy consumption challenges of bitcoin Twitter To raise awareness about the future of bitcoin. More recently, Musk and Saylor announced the formation of the Bitcoin Mining Council, Which includes several industry leaders who will eventually enable a permanent bitcoin mining initiative.

While this is a step in the right direction, it can take years for this Bitcoin Mining Council to make a real impact. Energy Web Chief Commercial Officer Jessie Morris – a blockchain protocol designed to facilitate application development for the energy sector – told Cointeclague that it is encouraging that Musk and Saylor are tweeting about a new bitcoin mining council Yes, action must be taken immediately.

Morris explained that Energy Web is currently working directly with a number of bitcoin miners to build software that leverages blockchain technology to real-time detect the carbon footprint of the bitcoin network. Morris noted:

“I want the bitcoin community to move towards a more efficient consensus mechanism, but I don’t think that will happen, so we have to come up with a solution now to fix the challenges with a proof-of-work consensus.”

Morris further believes that enabling a green bitcoin network through the development of carbon-neutral exchange-traded funds could be a near-term solution.

Although carbon-neutral ETFs may seem like a foreign concept, some investment management firms have already taken steps to ensure this. For example, Toronto-based Ninepoint Partners LP is an independent investment management firm that has approximately $ 6.5 billion in assets under management. Alex Tapscott, managing director of digital assets at Ninepoint, told Cointeclague that bitcoin makes up a good portion of assets under the firm’s management. “Crypto assets are a fast-growing and important asset class for us,” he said.

Ninepoint has created a bitcoin trust that Went public on the toronto stock exchange In January this year. The bitcoin trust was converted into an ETF on 6 May. Following the news of Ninepoint’s Bitcoin ETF, Tapscott reported that the firm decision made To compensate for 100% of your fund’s carbon footprint to ensure that interested investors receive green exposure to bitcoin:

“By absorbing the cost of bitcoin’s carbon footprint, we are giving investors the option to get green exposure to bitcoin. We think this is a unique and important offering that will help convince investors that buying bitcoin Are about on the fence. “

According to Tapscott, NinePoint is partnering with several initiatives to help ensure the firm’s green bitcoin ETF. For example, Ninepoint is working with the Crypto Carbon Rating Institute, a research company focused on the environmental impact of cryptocurrency, as well as CarbonX, an environmental software fintech firm.

Lena Klassen, co-founder of the Crypto Carbon Rating Institute, told Cointeclague that the firm uses its own methods and research to calculate the best estimate of the actual carbon footprint of the bitcoin network. Along with CarbonX, the CryptoCarbon Rating Institute reports to NinePoint about the bitcoin network’s share of its ETFs. CarbonX then uses its Xerofootprint practice, which supplies quantities corresponding to CO2e, or carbon dioxide equivalents, to balance pollution.

While Tapscott was unable to disclose specific numbers about the fund’s carbon footprint, he explained that this is primarily because assets under management fluctuate as new investors arrive and the price of bitcoin changes. . “The energy footprint of bitcoin varies with its hashing rate. It is a dynamic target that we adjust monthly to reflect these changes,” he commented.

Even with market fluctuations and the cost of funding carbon footprint entirely by Ninepoint, Tapscott said the firm would do it right for both the company’s future and the entire crypto sector. As she sees. Tapscott said:

“There are a lot of investors who want to get in touch with bitcoin, but they question its energy footprint, especially institutions that have environmental, social, governance (ESG) goals to fulfill.”

Green Fund – A Trend?

While there are still very few crypto-asset management investment firms that have promised to go green, the efforts of some firms may very well create a powerful movement.

Shortly after Ninepoint announced its green bitcoin ETF, One River Digital Asset Management Filed For carbon-neutral ETFs. One River declined to talk with Cointegraph about the matter, yet Tapscott said he hoped Ninepoint’s green initiative would serve as a model for the entire industry.

Although it is difficult to predict the future of the crypto space, it is encouraging to see that Bitmex, a crypto derivatives trading platform, recently Announced the decision to go carbon neutral. In addition, Marathon Digital Holdings, a United States-based venture bitcoin mining company, Unveils plans to achieve 70% carbon neutrality. Klassen said the crypto carbon rating institute is now seeing a trend for BTC mining companies – particularly those that are publicly traded – to address their own Scope 1,2 and 3 emissions to address them for.

Blockchain lead Paul Brody at Ernst & Young further told Coinclague that a carbon-neutral mining operation is certainly possible. “If you plan to keep only bitcoin in a carbon-neutral operation, then you have a green solution,” he said.

However, Brody pointed out that if one does a transaction with bitcoin, one may not be able to ensure that the transaction will be processed by a carbon-neutral minor. Brody said:

“You cannot know the history of those transactions. However, if you combine a carbon neutral mining operation with some level of carbon-offset compared to your other transactions, then you have the possibility of a massive green bitcoin operation.

A long term solution for bitcoin

While bitcoin ETFs, investment management firms and mining companies continue to pledge to go carbon neutral, a green bitcoin still needs a long-term solution to become a permanent reality.

For the long term, Morris believes that agreements that comply with official standards should be established. To ensure this, Energy Web has recently launched its Crypto Climate Accord., Noted by Morris, has 45 supporters including miners, crypto investors, foundations, exchanges and more. The agreement aims to make bitcoin fully renewable by focusing on two aspects.

Morris noted that the agreement was intended to “raise awareness of”Green wash. “According to Morris,”Clean crypto fund“There are reasons for skepticism, because blockchain networks that do not use the traditional proof-of-work consensus do not consume anywhere around the amount of energy like bitcoin.

Therefore, Morris believes that conversations about energy conservation should be focused exclusively on bitcoin. Morris also pointed out that the crypto climate agreement will take steps to help large-scale institutional and retail investors make their bitcoins green by bringing radical transparency to the bitcoin network.

However, one challenge that still needs to be addressed is the development of standards. According to Morris, Energy Web is currently considering developing a global standard to track bitcoin’s carbon footprint.

Apart from this, the crypto community should also continuously work towards an environmentally friendly solution for bitcoin. CarbonX’s chief operating officer Bill Tapscott told Cointeclague that “although a carbon-neutral path has been set, the cryptocurrency community must accept a responsibility for transitioning itself to the low-carbon world.”