Is crypto going green this year?
Bitcoin, the world’s largest cryptocurrency, has a well-established history of negative environmental impact, and that reputation has spread widely in the crypto space. Starting last year, part of the cryptosphere began to recede and work on self-regulation of the industry’s carbon footprint with the creation of the Crypto Climate Accord, reports the Financial Times.
The CCA was created by a coalition of 200 diverse crypto entities that partnered with the Rocky Mountain Institute, an environmental lobby based in Colorado. The coalition has all signed on to reduce carbon emissions generated by the consumption of electricity to net zero by 2030.
CCA signatories plan to achieve this goal through carbon offsets, converting energy sources from blockchain technology to renewables by 2025, and using green hashtags to track energy consumption. This follows a general shift towards renewables with China’s ban on all crypto last summer; China was previously the world’s largest bitcoin miner and relied on electricity produced by coal, creating a large carbon footprint.
When bitcoin miners left China in search of other countries to settle, many did so by setting up their mining rigs using renewable energy sources. The industry is very aware of the scrutiny it goes through when it comes to its carbon emissions, and a lot of it is working to reduce them.
New digital assets that have recently entered the market do so using a ‘proof of stake’ verification method for transactions that relies on existing cryptocurrencies that users already own. It is a considerably more energy efficient model than the âproof of workâ model used by Bitcoin, which requires enormous computing power and consumes a lot more electricity.
Could crypto convert? CCA thinks so
The coalition has taken a giant step forward by releasing a 32-page template that gives advice on how to conduct viable environmental crypto audits that would be accepted by a traditional pension fund. This is a big step and a first for the industry, but it remains to be seen how many crypto companies will go online.
The shift to greater energy efficiency is a major trend that large crypto asset management firm Valkyrie Investments is monitoring this year. Valkyrie is examining “concerns about sustainability and ESG compliance,” Leah Wald, CEO of Valkyrie Investments, said during the ETF 2022 webcast hosted by ETF Trends and Investopedia. “We will see this emerging class of publicly traded bitcoin miners also increasingly rely on renewable energy sources.”
Valkyrie describes himself as being at the intersection of the world of traditional finance and the emerging crypto industry with its variety of digital assets. The company currently offers two ETFs for investors looking for different types of crypto exposure, the Bitcoin Valkyrie Strategy ETF (BTF), which invests primarily in bitcoin futures contracts, and the Valkyrie Balance Sheet Opportunities ETF (VBB), which invests in public companies exposed to bitcoin. The company also offers various spot exposure funds.
Both funds are actively managed, with BTF having an expense ratio of 0.95% and VBB having an expense ratio of 0.75%.
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