BlackRock and Other ESG-Driven Companies Investing in Bitcoin Mining, Analyst Says
According to Bloomberg analyst Jamie Coutts, asset managers like BlackRock, Vanguard, and State Street have been involved in the Bitcoin mining industry for over three years. Coutts specifically mentions BlackRock’s application with the US Securities and Exchange Commission (SEC) to offer a Bitcoin spot ETF, which he considers unsurprising. BlackRock began its venture into Bitcoin mining in 2020 by investing in Marathon Digital, the second-largest publicly traded mining company. This move was made despite the criticism faced by the Bitcoin mining industry due to its reliance on fossil fuels.
All three asset managers are known for promoting Environmental, Social, and Governance (ESG) investment principles that emphasize limiting fossil fuel use. However, investing in Bitcoin mining does not seem to undermine their ESG credentials. According to Daniel Batten’s report, Bitcoin mining currently derives 50% of its energy from sustainable sources and has the potential to increase this percentage further by monetizing stranded energy and stabilizing energy grids.
Potential Effect of Bitcoin Mining Institutionalization
BlackRock, Vanguard, and State Street are currently the top investors in the three largest publicly traded mining companies: Marathon Digital, Riot Platforms, and Cleanspark. These companies collectively own 8.9% of the global hash rate, a significant portion considering that public miners only account for 15% of the global hash power.
While Coutts believes that these asset managers’ involvement in Bitcoin mining currently poses little threat to network decentralization, he points out a potential clash between network values and ESG principles in the future. Activist tendencies of these asset managers may lead other miners relying on fossil fuels to process “censored transactions.” However, this would not impede the functioning of the Bitcoin network as expected.
At the time of writing, Bitcoin is trading at $26,198.48, with a 0.57% gain in the last month according to Tradingview data.
Hot Take: Bitcoin Mining and ESG Principles
Despite their emphasis on ESG principles, asset managers like BlackRock, Vanguard, and State Street have been investing in Bitcoin mining for several years. This move may seem contradictory given the criticism faced by the industry due to its reliance on fossil fuels. However, Bitcoin mining has the unique ability to utilize sustainable energy sources and stabilize energy grids. While these asset managers’ involvement does not currently pose a significant challenge to network decentralization, it may lead to future conflicts between network values and ESG principles. Nevertheless, the Bitcoin network will continue to function as expected.
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