29th March 2022 > > Environmental benefits of cryptos Part 1.

tl;dr

Cryptos are GOOD for the environment.

Market Snap (at time of writing)

Market Wrap

BTC back at the opening price for the year (the CCC reported $47.3k on 3rd January 2022). That has been quite a journey, and it’s not even the end of Q1 yet. More fun and frolics to come folks!

I am confident that a bunch of FOMO weak hands bought above $50k last year, then panic sold when BTC went back down to the mid-30s. I suspect they will all pile back in again when we breach $50k once more.

Dollar cost averaging (DCA) is a proven money maker, so long as you have a core belief in cryptos.

Selling because of volatility is a proven loss maker. If the latter approach defines your crypto investment style, I recommend betting on the horses instead.

Occasional Series – Wall Street Update

As per the CCC on the 24thFebruary 2022 Wall Street looked attractive at 32,250 just after the Russian invasion of Ukraine with a declared short-term target of 35,000. Overnight we made that level. Even if you put it on at a measly £1 a point that gives a tax-free windfall of £2,750, though I remain bullish and won’t close yet (NOT investment advice).

Occasional Series – Rishi Sunak and the cost of living

I think I must be missing something here.

Rishi Sunak, Chancellor of the Exchequer, announces tax rises.

Sunak announces “multi-billion pound packages” to help alleviate surging fuel bills.

This self-inflicted carousel of taxpayers’ money simply adds to the cost of administration and bureaucracy. Why not just do away with the tax increase?

Curious Cryptos’ Commentary – Environmental benefits of cryptos Part 1

I think we are all familiar with some of the environmental concerns directed towards cryptos in general, and particularly at proof-of-work (POW) blockchains. BTC is – and I suspect always will be – POW whilst ETH (in full post millennial style) is transitioning to proof-of-stake (POS).

Almost all large multi-nationals have publicly laid claim that they are moving to carbon-neutral operations, a trend that was given a kickstart in 2001 when BP changed its formal, legal name from British Petroleum to Beyond Petroleum.

To date, a core part of any carbon-neutral strategy is to buy carbon credits to offset carbon emissions, whilst companies try to figure out efficient ways of reducing their carbon footprint.

Carbon credit prices have been volatile over the years, and subject to some reasonably well-deserved criticism. However, the concept has been adopted as one of the key processes to reduce mankind’s carbon emissions, whether you agree with the implementation or not.

For full disclosure, the CCC is an investor in Wisdomtree Carbon ETC (exchange traded commodity) that tracks the cost of carbon credits in the industrial world, allowing retail investment in the success - or otherwise - of the carbon credit trading scheme (NOT investment advice). My DCA price of around 1,750p is close enough to the 12-month low as to make little difference. No way would you get that timing right for a single purchase (see Market Wrap above).

This ETC comes with all the usual consumer protections available to retail investors in the UK, and for me it forms a core part of my long-term equity holdings. I have always thought carbon credits could only get more expensive. Putin’s disastrous war crime invasion against Ukraine is just one immediate factor that will exacerbate that price trend.

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There is a reasonably well-established carbon credit market which had a turnover in 2021 of $850bn.

The lion’s share of this market is the EU’s Emissions Trading System (EU ETS) which was first launched all the way back in 2005. The US and the UK have their own schemes. Remarkably China does too, though this does not stop that country from increasing its carbon emissions by more every year than the UK emits in its entirety.

There is also the voluntary carbon market (VCM) which is miniscule in comparison, at a turnover of less than $25bn last year, though it is growing rapidly.

The VCM is an attempt at creating a carbon credit market outside of those dictated by bureaucrats and civil servants, and remote from the lobbying power of large polluting multi-nationals.

In many ways, it is an attempt to decentralise a core element of the financial environment, putting control and decisions back into the hands of the many, not the few.

A little bit like cryptos one might think.

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And of course, cryptos are now getting involved in VCM, and rightly so.

This is just one of the many matches made in heaven occasioned by the crypto revolution happening right now.

Disruption of a producer led carbon credit trading system using the forces of decentralisation will ensure that the cost of carbon credits in the officially mandated world can only increase from here.

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That is the philosophy and the theory. How does it work in practise?

You have already finished your cornflakes and I won’t take up any more of your time today. We will address this topic again tomorrow.