7th August 2023 > > ESG & BTC.

tl;dr

ESG, BTC, and the good news.

Market Snap

Market Wrap

Whales continue to accumulate, whilst weaker retail hands continue to sell to these diamond hands. Illiquidity is picking up, with coins disappearing into wallets that just never sell (that’s mine as an example). The lack of volatility surprises me every time I wake up, but something must give soon.

Curious Cryptos’ Commentary – ESG

A popular fad of limited benefits, ESG (environmental, social, and governance) investing is an attempt to put a moral framework with a much-reduced horizon onto legitimate commercial activities. This makes capital (both human and financial) less productive making all of us poorer, reducing tax revenues, hurting public services, and degrading the environment more than would otherwise be the case. Not a mainstream opinion I know, but it’s far easier to sell an ESG vision to a gullible media and ill-informed investors than it is to put in the hard graft explaining the damage it does.

However, ESG cannot be ignored. Step forward KPMG and a report titled “Bitcoin’s role in the ESG imperative”:

https://advisory.kpmg.us/articles/2023/bitcoin-role-esg-imperative.html

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The introduction tells us:

“In this paper, we’ll evaluate the environmental, social, and governance impact, as well as dispel some of the misconceptions that still thrive today, and consider how Bitcoin stacks up against an ESG framework.”

Spoiler alert: crypto enthusiasts are going to like the conclusions. It won’t convince the naysayers, as they will still be repeating the same tired old tropes for evermore, but those who have an open mind might perhaps see a fresh perspective.

First up is the environment, with a pleasing recollection that in 2017 Newsweek published an article titled “Bitcoin Mining on Track to Consume All of the World’s Energy by 2020”. Oh dear.

Though this report doesn’t mention that Netflix, video gaming, clothes dryers, and Christmas lights all individually consume more energy than BTC, it does include this helpful graphic expanding on that very topic:

The report goes on to consider how BTC can be a force for good in driving the adoption of renewables, managing the grid load, recycling heat, and reducing methane emissions, a gas 80 times more potent than carbon dioxide. These are all valid points previously made, but there is no harm in repeating the message:

“Between BTC’s flexible demand load, ability to co-locate next to renewable energy sources, use of under-utilized energy supply, and its ability to assist in reducing emissions, BTC miners can be a useful ally in the transition to more renewable energy sources, and reduce emissions …”.

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Looking at the social element of ESG, the often stated, but entirely incorrect, trope that cryptos are a boon for illegal activities is considered.

Chainanalysis claims that in 2022, illicit use of crypto accounted for 0.24% of transaction volume. The UN believes that 2%-5% of global GDP is used for money laundering alone. That doesn’t include the criminal activity that has to take place before money laundering is required.

On the positive side of the social ledger, KPMG considers four examples of how BTC is a force for good – the dramatic reductions in the cost and time for overseas remittances especially from the diaspora into poorer countries, Ukraine fundraising, access to electricity in rural Africa, and financial inclusion.

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Finally, the G in ESG for governance, which is addressed by just one word – decentralisation, which is the real power behind the crypto revolution.

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Daniel Batten, co-founder of CH4 Capital, welcomed this report, according to Decrypt:

“I think it's an important report and a milestone the ecosystem should celebrate. It is important people read reports put out by Bitcoin opponents … there is still much work to be done, with several mainstream news channels continuing to publish misinformation about Bitcoin with impunity.”

I don’t think I need to list those news channels for you, we all know who they are.