• A 2022 Cambridge Centre For Alternative Finance (CCAF) study on Bitcoin’s environmental impact underestimated the amount of sustainable Bitcoin mining going on.
• ESG investor discomfort with Bitcoin is largely due to this CCAF study, which reported that only 37.6% of Bitcoin mining energy use is sustainable.
• To get ESG funds behind Bitcoin and avoid punitive regulation, independent data needs to be provided demonstrating unambiguously how much energy usage is actually sustainable.
Bitcoin’s Environmental Impact
The Cambridge Centre for Alternative Finance (CCAF) conducted a study in 2022 on the environmental impact of Bitcoin mining, and the results were somewhat disheartening. The report found that only 37.6% of total energy used for mining was from renewable sources, leaving many feeling uncertain about whether or not investing in Bitcoin would be an ethical decision from an environmental standpoint.
ESG Investor Discomfort
Environmental, Social and Governance (ESG) investors have been reluctant to support the idea of investing in Bitcoin due to these findings. Even though Alex de Vries’ work has been debunked by previous studies, many ESG investors trust the CCAF report over one from the Bitcoin Mining Council (BMC), which reported that 58.9% of energy used for mining was from renewable sources. This hesitancy has hindered user adoption and led some environmental groups to campaign against unregulated growth within the industry by pushing for stricter regulations on miners by governments around the world.
What Would It Take?
For ESG funds to back projects involving Bitcoin investments, three things need to be established first: independent empirical data demonstrating exactly how much energy usage is actually sustainable; evidence that macro trends within the industry are trending towards more renewable sources; and proof that increased investment into bitcoin will not have a negative effect on climate change or ecological balance globally.
Confidence In Sustainable Energy Usage
Recent research has revealed that this confidence can be had — at least 52.6%of all energy used for bitcoin mining comes from sustainable resources — but it needs to be communicated better so that ESG funds feel secure enough to invest in projects involving cryptocurrencies such as bitcoin without fear of backlash or loss of reputation among their shareholders or clients.
It is up to researchers and industry bodies alike to present reliable data regarding sustainability within crypto-mining operations so that ESG funds feel comfortable enough with investing in digital assets like bitcoin while also contributing positively towards global sustainability goals set out by governments and international organizations alike