Transparency is Coming to Bitcoin Mining as Institutions Eyeball ESG

  • Financial institutions and firms are concerned about bitcoin’s ‘ESG black eye’, says Jesse Morris, CEO of Energy Web
  • The organization’s crypto token is up around 105% in the past two weeks

The environmental impacts stemming from the big bitcoin mining business are given a welcome dose of transparency by the world’s largest asset manager.

Energy Web, which focuses on the mechanics of decarbonizing the global economy, is expected to release “sustainability scores” for miners in the coming months – an effort highlighted by BlackRock.

BlackRock said in a statement earlier this month that it was “encouraged” by Energy Web programs and others to bring transparency to sustainable energy use in bitcoin mining. . The group of funds partnered with Coinbase to offer institutional clients of its Aladdin platform access to bitcoin earlier this month and launched a private bitcoin trust a week later.

Energy Web CEO Jesse Morris told Blockworks that Blackrock’s position reaffirmed that institutional investors looking to increase crypto exposures will demand greater ESG disclosures.

“Their boards are saying, ‘Show us how you’re doing your part to decarbonize the global economy; don’t invest in things that put carbon into the atmosphere,” Morris said. “We’ve had conversations with many different institutional investors as well as financial organizations that are trying to build products around bitcoin, but are very concerned about the asset’s ESG black eye.”

The Energy Web (EWT) token has seen a big boost since BlackRock’s cry. EWT, down 67% in the last 12 months, is up about 105% from two weeks ago.

Interest in ESG investing – made with consideration of environmental, social and governance issues – has grown in recent years within mainstream finance.

England-based financial services firm Hargreaves Lansdown reported on Monday that its clients holding ESG ETFs increased by almost 708% between January 2017 and June 2022, from 0.13% to 1.05%.

ESG ETFs accounted for 42% of total European ETF flows during the second quarter, according to the firm.

Morgan Stanley said in a filing last week that its first ETFs would be ESG-focused.

The Bitcoin Mining Council said last month that respondents to its latest survey, representing more than half of the global bitcoin network, used electricity with a sustainable energy mix of 66.8%, as of June 30. The mining industry’s sustainable energy mix is ​​now estimated to be around 60%, the organization said – an increase of around 6% year-on-year.

Proving that miners are as durable as they say they are

Energy Web’s Green Proofs for Bitcoin program is a way for bitcoin miners to prove they are using renewable electricity.

Marathon Digital, for example, said in April it was moving bitcoin miners from its Montana facility to new locations with more sustainable power sources. The company expects its mining operations to be carbon neutral by the end of this year.

“They’ll have Powerpoints and PDFs they’ll post that say, ‘Don’t worry, we’re 60% renewable’ or ‘Don’t worry, we’re 100% renewable,'” Morris said of the minors. “What we’re trying to do with this Green Proofs for Bitcoin initiative is actually help people verify these claims.”

Energy Web has completed its initial draft certification criteria and is currently applying it to a dozen hosting companies, publicly traded bitcoin miners, as well as smaller miners, Morris said.

Through the certification process, bitcoin miners share data about their location, electricity usage, how many renewables they have purchased, and how they have purchased them, such as whether they purchased unbundled certificates or invested directly in a renewable energy facility. The information is then used to create a net impact score.

After releasing the first batch of certifications in the fall, Energy Web will seek to assess more miners.

“Ideally, institutions like BlackRock can use these credentials as they see fit, but so can any other institutional investor and any other company looking to understand how green these different miners are,” Morris said.

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  • Ben Strack

    Ben Strack is a Denver-based journalist who covers macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local Long Island newspapers. He graduated from the University of Maryland with a degree in journalism. Contact Ben by email at [email protected]

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