In a recent admission, Bloomberg Intelligence’s crypto analyst Jamie Coutts revealed BlackRock’s significant engagement in Bitcoin (BTC) mining. Given BlackRock’s prominence in traditional finance, the disclosure could raise a lot of questions.
Coutts makes it clear that BlackRock’s foray into bitcoin mining is not wholly unexpected. Three years ago, the world’s largest asset management company began this adventure by investing mostly in Marathon Digital, one of the biggest publicly traded mining businesses.
This action started at a time when concerns about the crypto mining sector’s significant reliance on fossil fuels were being raised. BlackRock, along with Vanguard and State Street, continues to build up interests in public miners despite difficulties and a less favourable year for miners in 2022, proving their dedication to the industry.
The potential influence of this growth on the ESG (Environmental, Social, and Governance) credentials of these asset managers is an intriguing part of this trend. More than 50% of the energy used for Bitcoin mining, according to recent estimates, is derived from green energy, raising the prospect of greater sustainability.
Institutional investors who are concerned about ESG may see Bitcoin more favourably if its environmental benefits become more well-known. Although it is unknown exactly how Bitcoin’s ESG credentials played a part in these transactions, it is probable that some ESG due diligence was done.
Something to worry about
Nevertheless, there are worries about potential conflicts with the network’s values due to the increased engagement of significant asset managers in BTC mining. Questions about conflicting ESG objectives and transaction censorship arise as a result of these companies taking a prominent position among investors in publicly traded miners and controlling a sizeable portion of the world’s hashing power.
