As has been widely documented, bitcoin mining doesn’t have the best reputation when it comes to environmental friendliness.
However, there are exchange traded funds that address that issue, namely the Valkyrie Bitcoin Miners ETF (WGMI).
“The bitcoin miners in the WGMI portfolio use approximately 77% renewable energy. These mining companies utilize sources like solar and hydropower. Some miners are very creative, seeking to generate electricity from areas with volcanic energy or even locating mining rigs in oil fields to use natural gas that would otherwise be flared,” according to Valkyrie.
WGMI’s commitment to environmentally sustainable bitcoin is impressive because not many funds go in this direction. It’s also highly relevant at a time when some politicians are looking to address bitcoin mining’s environmental impact.
“A group of House democrats want the Environmental Protection Agency to look into the environmental effects of crypto mining, citing ‘serious concerns’ about pollution and greenhouse gas emissions,” reports Nicolas Vega for CNBC. “Two dozen legislators, led by Rep. Jared Huffman (D-Calif.), sent a letter to the EPA this week asking the regulatory body to make sure mining companies were in compliance with the Clean Air Act and Clean Water Act.”
WGMI is actively managed, meaning that it can credibly emphasize bitcoin miners that focus on sustainability. On its own, that’s a compelling trait for ESG-oriented investors. For those who are simply crypto fans, there are benefits as well because as miners turn to renewable energy, costs can decline, potentially boosting margins along the way. Not to mention, it’s always a positive to not run afoul of politicians and regulators.
“In addition to evaluating mining companies to ensure they are in compliance with environmental laws, the letter requests that the EPA engage with the communities where the server farms are located when reviewing permits to ‘ensure communities are not left with the toxic burdens associated with this technology,’” according to CNBC.
Additionally, WGMI offsets some of the volatility associated with dedicated crypto mining equities by not being entirely allocated to that asset class. For example, the Valkyrie ETF allocates roughly 11% of its total weight to Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and Taiwan Semiconductor (NYSE:TSM).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.