Pair of New ETFs Have Exposure to Greenification of Crypto Mining

Mining for bitcoin and other digital assets can be energy-intensive, and that’s a point being raised with more regularity as of late, prompting some critics to ponder the sustainability credentials of cryptocurrency as an asset class.

The Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC) — a pair of new equity-based exchange traded funds — not only provide exposure to stocks with above-average correlations to bitcoin, these new funds also provide leverage to the crypto mining industry’s efforts to up its environmental responsibility.

SATO follows the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts & ETPs Index, while BKLC tracks the Alerian Galaxy Global Blockchain Equity, Trusts & ETPs Index. Both ETFs debuted earlier this month.

Suggesting that some companies in the blockchain and crypto ecosystems are taking environmental responsibility seriously, some members of both BKLC and SATO recently signed the Crypto Climate Accord (CCA).

The CCA’s “objective is to transition the entire crypto industry to net-zero greenhouse gas emissions by 2040. Over 150 companies have joined as CCA Supporters, which help develop solutions in support of the CCA but have not necessarily made a commitment to decarbonize. Over half of these supporters are also CCA Signatories that commit to achieve net-zero emissions from crypto operations by 2030,” says Alerian analyst Roxanna Islam.

As Islam notes, nearly 27% of the components in SATO’s underlying index are CCA signatories. That group includes Marathon Digital Holdings (MARA), Bit Digital (BTBT), and Hut 8 Mining (HUT), among others.

In fact, some members of the BKLC and SATO rosters are committed adopters and users of renewable energy, including wind and solar power.

“Additionally, these large public companies have taken steps to utilize more green energy in their mining operations,” adds Islam. “Many of these also have mining facilities in colder regions like Western Canada. Canada is abundant with land, wind energy, and natural gas—ranking in the top 5 natural gas producers behind the United States, Russia, and Iran. Canada, however, is thought to be the most ideal out of these locations because of more relaxed crypto regulations and freezing temperatures. Operating mining facilities in colder weather regions helps cool the large amount of heat generated by the miners, which lowers the electricity cost.”

For its part, Hut 8 uses some wind power, and 47% of Bit Digital’s U.S. operations are powered by carbon-free sources. Marathon Digital is aiming to be 100% carbon neutral by next year.

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