As companies like Ninepoint and Greenridge have demonstrated, Bitcoin is going green. And this will attract more institutional investors.
Ninepoint Partners, a Toronto-based investment firm managing $8 billion in assets, and Greenidge Generation, a New York-based power provider and bitcoin mining company, have each announced that they will be using carbon offsets to compensate for any carbon emissions resulting from their operations, signaling the growth of a significant new trend for the industry.
Carbon offsets allow companies like Ninepoint and Greenidge to pay for a reduction in carbon dioxide emissions somewhere else to compensate for any carbon emissions resulting from their own business practices.
Greenidge Generation announced that it will offset all greenhouse gas emissions from its bitcoin mining operations by June 2021.
“Greenidge will purchase voluntary carbon offsets from a portfolio of U.S. greenhouse gas reduction projects,” according to a recent release. “Each project has been reviewed and certified by one of three well-recognized Offset Project Registries … ensuring that any projects funded by Greenidge reduce emissions or increase sequestration of greenhouse gas in a manner that is real, permanent, and verifiable.”
Meanwhile, Ninepoint will use a portion of its management fee to pay for 100% of offsets to compensate for any carbon produced by the mining of the bitcoin held in its exchange-traded fund (ETF).
There’s no question that investors are looking for ways to show they are “green” and aware of the importance of environmental issues, especially climate change.
A recent survey by HSBC found that 43% of financial institutions are holding “green” bonds and 75 percent of financial managers are either already factoring social and environmental criteria into decision-making or are considering doing so.
Last year, the Swiss National Bank excluded coal miners from its equities portfolio. And recently, the Bank of Japan indicated that the need to take action on climate change was on its radar.
“Environmental, social and corporate governance (ESG) is one of the most important and fastest growing categories in the investment industry today,” Alex Tapscott, the managing director of Ninepoint’s digital assets group, told Bitcoin Magazine. “Many investors face a dilemma — they want to meet ESG standards but they also don’t want to limit themselves to what investments they can make. This is true for many asset classes, and bitcoin is no exception. Investors increasingly want real ESG solutions for their portfolios.”
As part of its carbon offset program, Ninepoint’s ETF is contributing to forest conservation projects in the Amazon. In addition to capturing some carbon dioxide through planting trees, these projects aim to help with economic development for people living in the region.
“We are working with CarbonX, who helps us identify projects that meet their strict approved standards,” Tapscott said. “That gives us comfort that when they enter the market for carbon offsets that a real difference is being made. Two of the projects are the Cordillera Azul National Park and the Tambopata-Bahuaja Biodiversity Reserve, both in Peru.”
Still, there could be room for making Bitcoin a cleaner industry. While offsetting the carbon it emits is a good start, reducing this carbon in the first place is another challenge.
“Carbon offsets alone are not a cure-all for Bitcoin,” explained Tapscott. “The most important thing is to decarbonize the mining process, something that is already well underway.”
Greenidge’s representative Michael McKeon sees the importance of carbon offsets, but also sees what the company is contributing to the community.
“The local community sees the value of the jobs we have created, the taxes we have paid and the impacts we have had on the local economy,” he told Bitcoin Magazine, adding that its facility also contributes power to the local grid.
Greenidge announced in March that it would be the first bitcoin mining firm with its own power plant to go public on the U.S. stock exchange.
“Our bitcoin mining capability is already best-in-class and seamlessly integrated with our electricity generation that powers thousands of homes and businesses,” Jeffrey Kirt, CEO of Greenidge Generation, said in a release. “By taking the bold and unique step of making our cryptocurrency mining fully carbon neutral immediately — as opposed to at some distant date in the future — Greenidge is once again leading in environmental efforts.”
Though it’s easy to demonstrate the the legacy financial industry, as well as many other sectors in the world, are far more environmentally damaging than Bitcoin, the energy-intensive practice of Bitcoin mining has become a hot topic lately. But as the incentives around the practice enable larger shifts to renewable power, more institutional investors are likely to flood in.
“Offsetting is a real, substantive step that we believe will make a difference,” Tapscott said. “We hope that making Bitcoin greener will attract new investors to the asset class. In our view, Ninepoint’s efforts are a form of environmental self-monitoring. And our hope is others will follow.”
