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How the Bitcoin Industry Is Responding to Wall Street’s ESG Concerns

One cryptocurrency asset manager is buying emission offsets. A digital-asset trading platform says it wants to be “carbon negative” within 18 months. A new token would wrap Bitcoin BTC -4.97% with carbon credits so that they could trade together as a single asset.

Just a month after Tesla CEO Elon Musk tweeted his concerns about the potential environmental harm from bitcoin mining, sending the cryptocurrency’s price into a tailspin, some industry players are rushing to respond. They’re looking at ways to address the environmental, social and governance (ESG) issues that might deter big institutional investors from embracing bitcoin.

“They are doing it out of the sense of survival,” said John Reed Stark, a former chief of the U.S. Securities and Exchange Commission’s Office of Internet Enforcement who now works as a consultant.

Though some experts had been warning for years that the bitcoin market’s narrative of “institutional adoption” was on a collision course with the ESG mandate that now dominates the activities of big money managers like BlackRock, it’s too early to tell how much of a difference the latest efforts might make. Will the bitcoin mining industry actually shrink its carbon footprint or just announce ambitious goals and make peripheral adjustments to give big investors cover?

“Bitcoin in its current form is not good for the environment,” said Campbell R. Harvey, an economist and professor at Duke University. “Nobody can argue that this isn’t a true statement.”

Some industry executives have criticized the narrative that bitcoin is particularly bad for the environment, arguing that the adverse climate effects are overblown. As MicroStrategy CEO Michael Saylor said at a meeting this week of the newly formed Bitcoin Mining Council, “We are not trying to fix Bitcoin” but trying to counter the threat that “people don’t understand bitcoin.”

Another position is that the digital currency’s value to the economy and society justifies the energy consumption.

Jesse Powell, CEO of the cryptocurrency exchange Kraken, said in an interview published this week that bitcoin is “a lot greener than people give it credit for.” Early Thursday, Bitcoin Magazine tweeted out a screen grab of the interview, and Musk tweeted in response: “Based on what data”?

Source: Coindesk