In the wake of the much-anticipated, just-completed Ethereum merger, some crypto market observers believe there is increasing pressure on bitcoin miners to prioritize environmental sustainability, including increased use of renewable energy.
Environmental pressure on Bitcoin after merger
Should this move materialize in earnest, it will have potentially positive implications for a selection of exchange-traded funds, including Invesco Alerian Galaxy Crypto Economy ETF (SATO ). SATO’s 42 holdings include several of the most notable names in cryptocurrency mining, confirming ETF is relevant in this conversation.
“In a Thursday announcement following the merger, the US-based Environmental Working Group, or EWGannounced that they would launch a $1 million campaign aimed at encouraging Bitcoin (BTC) to go green as opposed to using an outdated protocol’ like PoW. The announcement came as environmental activist group Greenpeace launched a petition directly with Fidelity Investments to ease the transition to PoS,” Turner Wright reported for Coin Telegraph.
For those unfamiliar with crypto parlance, “PoW” refers to “proof of work,” while “PoS” is the shortened version of “proof of stake.”
Simply put, proof of stake is seen as the greener alternative, and with Ethereum – the second largest digital asset by market capitalization – doing so, there is pressure on bitcoin to do the same.
“Many US lawmakers have targeted major Bitcoin miners, with members of the House Energy and Commerce Committee requesting in August that mining companies provide information including the energy consumption of their facilities, energy sources and what percentage came from renewable energy. At the state level, New York proposed to introduce a two-year moratorium on PoW mining, legislation that would also prohibit the renewal of licenses of existing companies unless they operated on 100% renewable energy,” according to Coin Telegraph.
These actions do not fall on deaf ears, like some SATO components show willingness to embrace renewable energy. Some did just that before the Ethereum merger.
There are compelling reasons for crypto miners to increase the use of renewable energy. By proving that they are willing users of green energy sources, bitcoin miners can reduce regulatory headwinds while potentially increasing their environmental, social and governance credentials.
Some investors may not prioritize these issues, but for the pure capitalists out there, SATO Member companies that reduce dependence on fossil fuels and increase consumption of renewable energy can achieve bottom line benefits over time.
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