ERShares: Why This Investment Manager Doesn’t Invest in Bitcoin

By the ERShares Team

ERShares’s proprietary methodology, the Entrepreneur Factor, has embedded ESG factors since its inception. ESG is an integral part of the ERShares investment philosophy, and therefore, the firm rarely faces a trade-off between investment opportunities and ESG policy compliance along the investment process.

The firm positions itself as a thought leader and has taken measurable actions to encourage companies they invest in to consider ESG angles. They realize that beyond the encouragement of particular ESG initiatives to the preceding companies, it is far more critical and impactful to bring awareness of the ESG issues at hand.

Bitcoin’s energy consumption and environmental impact now have extremely significant unintended consequences than mainstream stories suggest. Therefore, the ERShares team has worked to frame the issue and stand against Bitcoin as it uses a considerable amount of energy, the proportion of renewable energy utilized remains unclear, and regulations regarding cryptocurrency overall remain nebulous.

Bitcoin Mining Electricity Usage, Emissions Too High

Blockchain technology, although an incredible technological advancement, has astonishing and evident environmental footprints.

The energy consumption is rooted in the “crypto mining” that makes digital currencies energy-intensive as they are. Researchers estimate that “mining Bitcoin, the most popular blockchain-based currency, uses more electricity than entire countries like Argentina” (NY Times).

Although it makes up a small portion of the world’s total transactions, the carbon footprint involved compares to entire nations’ carbon footprints. Bitcoin energy emissions alone can further exacerbate global warming well beyond levels that can potentially lead to even more detrimental effects of climate change.

Gradually, the cryptocurrencies’ environmental impact is starting to vex climate policy. “If left unchecked, Bitcoin mining in China— where an estimated two-thirds of the world’s blockchain mining takes place—could make it difficult for the world’s largest polluter to meet its climate goals. China’s Inner Mongolia region said recently that it was moving to ban the practice because it was hampering the province’s efforts to meet the new carbon-emissions goals set by the national government” (NY Times). Hence, governments worldwide are beginning to crack down on crypto mining and lock in new climate change policies.

ERShares’s Stance on Bitcoin

ERShares has set its own standards by upholding a clear policy not to invest in Bitcoin for this very reason. In extension to this, most of their employees have adopted this policy in their personal portfolios for the same reason.

The ERShares team also spreads awareness to the public through their media streams. For instance, Coinbase (COIN) made history as the first major cryptocurrency company to list its shares on a stock exchange in the United States, pushing its valuation close to $100 billion. (NY Times) Although this was hailed as a landmark moment for global digital currencies, the firm has also addressed the stock’s negative impact on the environmental and regulatory issues on the rise since its recent debut.

Within the financial industry, digital currency’s energy consumption can be overlooked as trivial compared to the implications of traditional banking. Therefore, ERShares works to ensure that investors are more conscious of the Bitcoin system and its indirect effect on ESG.

There are efforts to make cryptocurrency technology more environmentally sustainable. Still, until they are enacted, ERShares will continue to oppose Bitcoin and bring awareness as a thought leader within the global financial industry.

Entrepreneurs: “Conscious of Long-Term Consequences”

Behind the companies ERShares invests in are entrepreneurs who work as thought leaders, much aligned to the investment manager’s own team culture. These companies are created by entrepreneurs who identified pain points in their personal lives and continue to develop new solutions. ERShares’s academic research also goes back twenty years and demonstrates the consistent outperformance of competition due to entrepreneurs creating a unique culture. Overall, they are conscious of long-term consequences and harness their resources in a productive and allocative manner.

Beyond the fundamental issue of Bitcoin, entrepreneurs think about innovation differently and consider the potential negative implications of the innovation disruption. Thus, ERShares firmly believes that the companies they invest in and present to their investors as opportunities work to incorporate the same level of awareness within their organizations as the team does internally at ERShares.

ERShares is an investment management firm that focuses on entrepreneurial stocks. Their flagship ETFs, are the ERShares Entrepreneurs ETF (ENTR) and the ERShares NextGen Entrepreneurs ETF (ERSX).

Past performance is no guarantee of future results. Please refer to the following disclosures:

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