Over its brief lifespan, bitcoin has developed a reputation for being energy-intensive. It takes large amounts of electric power, often sourced from fossil fuels, to source small amounts of the cryptocurrency. By some estimates, the power needed to mine large amounts of bitcoin is equivalent to the energy needs of some cities or small countries.
It’s no wonder that bitcoin has drawn the ire of climate activists and environmental, social, and governance (ESG) investors. All of that may imply negativity for exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO).
Things don’t have to be that way. In fact, some market participants believe bitcoin can be a force for good when it comes to climate. If that prognosis proves accurate, SATO, which holds many bitcoin miners, could benefit over the long term.
Bitcoin Could Sport Climate Change Credentials
Global temperatures are soaring. Many people around the globe are fretting about the potential of a major El Niño storm season later this year. Therefore, it would behoove bitcoin miners, including SATO components, to show the investment community they’re prioritizing green and renewable energy. Some investors believe this isn’t a far-flung concept.
“Contrary to belief in some quarters, this revolutionary digital currency has the capacity to drive positive change and aid in the fight against climate change,” observed deVere Group CEO Nigel Green. “With its unique characteristics and transformative potential, Bitcoin is positioned to play a crucial role in transitioning to a more sustainable and eco-friendly future.”
Green also noted that bitcoin miners could be integral in upping adoption of renewable energy. According to him, adding bitcoin transactions to the blockchain is an ideal scenario for increased use of green energy. An added benefit there could be that as more bitcoin miners, including SATO member firms, embrace renewables, they’ll bring more supply of those forms of energy to market. This could lower prices and make those sources more affordable to a broad audience.
“Bitcoin miners, who need huge amounts of energy, could act as major buyers of last resort, providing substantial profit for investment and expansion. This would then enhance the renewables supply, which would go on to bring down prices for consumers and further drive demand,” added Green.
Bottom line: The bitcoin industry, including miners, can be a positive in the climate change equation. Now’s the time for the industry to prove as much.
VettaFi LLC (“VettaFi”) is the index provider for SATO, for which it receives an index licensing fee. However, SATO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of SATO.
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