Like any other industry, bitcoin mining is not free of risk or potential controversy. Indeed, despite its relative youth, the bitcoin mining industry has already faced controversy at the hands of critics who point out that the industry is not environmentally friendly.
ESG pressure on Bitcoin miners could benefit investors
At a time when companies and investors – both professional and retail – are increasingly interested in crypto and scrutinize the environment, social and governance (ESG) factors related to various asset classes, bitcoin miners need to up their sustainability games.
Some are doing just that, and increasing environmental transparency from the industry can be supportive of exchange-traded funds such as e.g. VanEck Digital Assets Mining ETF (DAM ).
“Environmental impacts stemming from the big business of bitcoin mining are getting a welcome dose of transparency at the world’s largest asset manager,” reported Ben Strack for Blockworks. “Energy Web, which focuses on mechanisms to decarbonize the global economy, is set to publish ‘sustainability scores’ for miners in the coming months – an effort highlighted by BlackRock.”
BlackRock recently announced a crypto partnership with Coinbase (NASDAQ:COIN) where institutional customers can access the Aladdin platform. It indicates that the world’s largest asset manager sees some merit in cryptocurrency as an investable asset class.
Specifically to DAMthese headlines are relevant not only because Coinbase is the ETF’s fifth largest holding with a weight of 5.60%, but also because BlackRock is one of the most well-known, vocal supporters of ESG in the investment environment. Investors’ interest in ESG rises, which indicates that DAM The member companies must take this trend into account.
“Interest in ESG investments – made with environmental, social and governance issues in mind – have grown in recent years within traditional finance,” according to Blockworks. “England-based financial services company Hargreaves Lansdown reported on Monday that its clients are holding ESG ETFs had grown nearly 708% between January 2017 and June 2022 – from 0.13% to 1.05%.”
Some DAM components follow the call. This group includes Marathon Digital Holdings (NASDAQ:MARA), which is DAM’s largest holding with a weight of 8.55%.
“For example, Marathon Digital said in April that it was moving bitcoin miners from its facility in Montana to new locations with more sustainable power sources. The company expects mining operations to be carbon neutral by the end of this year,” Blockworks added.
For investors, there are other tangible benefits DAM components that raise sustainability profiles. Wider use of renewable energy can lead to lower costs, which in turn increases profitability.
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