Could Bitcoin be the greatest ESG investment of all time?
If you have a traditional finance background (TradFi), you know about ESG investing. ESG – which stands for environmental, social and governance – refers to a set of standards used by socially conscious investors to screen potential investments. Generally, people who invest in ESGs are as concerned about profits as they are about their investments having a positive impact on the world.
When you consider all these factors, it stands to reason that bitcoin (BTC) could be one of the greatest ESG investments of all time. Not only has it generated outsized returns for investors (at the time of writing, BTC is up 71% in 2023, 342% over the past three years, and a whopping 44,404% over the past 10 years), it has huge positive effects globally.
You read Crypto long and shortour weekly newsletter with insights, news and analysis for the professional investor. sign up here to get it in your inbox every Wednesday.
Bitcoin appears to be one of the few sectors, both in the US and globally, that does not have coal as its primary energy source. A recent report found that because much of BTC mining relies so heavily on off-grid power sources, 52.2% of the Bitcoin network is powered by zero emission energy. There are at least 29 mining companies that use 90%-100% zero emission energy and a further 12 that use emission negative sources.
Compare that to the US main grid, where only 36.7% comes from zero emission sources. That means almost every other major industry in the US relies on a grid that is almost two-thirds powered by fossil fuels.
Bitcoin appears to be one of the few sectors, both in the US and globally, that does not have coal as its primary energy source. A recent report found that because much of BTC mining relies so heavily on off-grid power sources, 52.2% of the Bitcoin network is powered by zero emission energy. There are at least 29 mining companies that use 90%-100% zero emission energy and a further 12 that use emission negative sources.
Compare that to the US main grid, where only 36.7% comes from zero emission sources. That means almost every other major industry in the US relies on a grid that is almost two-thirds powered by fossil fuels.
Bitcoin’s biggest environmental impact is potentially that it stimulates innovation and the use of clean energy sources. Methane gas is about 25 times worse for the environment than carbon dioxide (CO2), and according to the Climate and Clean Air Coalition, “cutting methane is the strongest lever we have to slow climate change over the next 25 years.” It turns out that two of the biggest methane producers are oil fields and landfills – which bitcoin mining helps address.
Bitcoin mining company Vespene has developed a method to convert methane emitted from landfills into electricity to run bitcoin mining rigs in an environmentally friendly way, thereby eliminating these methane emissions. Also, bitcoin mining using methane vented power is far more effective in reducing carbon emissions than any other renewable energy source we have. In fact, mining bitcoin from vented methane removes 13 times more emissions from the environment than coal puts into it. It is possible that in a few years bitcoin mining could prevent more carbon from entering the atmosphere than the carbon emitted from creating the electricity needed to power the network.
