Carbon-neutral manufacturing As investors seek greener crypto, bitcoin ETFs are gaining traction.

Steps are being taken to ensure that investors have green Bitcoin alternatives, but this may only be a temporary fix for a long-term problem.

Carbon-neutral manufacturing As investors seek greener crypto, bitcoin ETFs are gaining traction.

Bitcoin (BTC) has been a big topic of conversation recently, even among people outside the crypto industry, but not for the best of reasons. The amount of energy required to generate Bitcoin, in particular, has raised worries among investors considering BTC as a diversification alternative.

Bitcoin presently consumes roughly 110 terawatt-hours each year, according to the Cambridge Center for Alternative Finance. According to a Harvard Business Review article, this translates to 0.55 percent of worldwide electricity generation, or nearly the same as a small county.

Despite this, it's worth noting that any industry that offers value to society will almost certainly have an environmental impact. With the rise of global warming and other environmental concerns, it's more important than ever for the crypto industry to understand the amount of energy necessary to mine Bitcoin. As this fear becomes a reality, members of the bitcoin community will be able to devise solutions to address the problem in the future.

Carbon-neutral Bitcoin funds are today's green solution.

Elon Musk and Michael Saylor, two influential CEOs and crypto investors, continue to highlight Bitcoin's energy usage issues on Twitter in order to increase awareness for the cryptocurrency's future. Musk and Saylor recently announced the development of a Bitcoin Mining Council, which would bring together numerous industry experts to enable long-term Bitcoin mining activities.

While this is a positive move, it may take years for the Bitcoin Mining Council to have a significant impact. While Musk and Saylor tweeting about a new Bitcoin Mining Council is positive, Jesse Morris, chief commercial officer of Energy Web, a blockchain system designed to simplify application development for the energy sector, told Cointelegraph that Immediate action is required.

Energy Web is now collaborating with a number of Bitcoin miners to develop software that uses blockchain technology to identify the Bitcoin network's carbon impact in near real time, according to Morris. Morris remarked:

“I wish the Bitcoin community would adopt a more efficient consensus method, but I doubt it will, therefore we must find a solution now to address the issues with proof-of-work consensus.”

Morris also feels that the establishment of carbon-neutral exchange-traded funds could be a short-term option for enabling a greener Bitcoin network.

Although carbon-neutral ETFs may appear to be a novel concept, certain asset management organizations have already taken steps to assure that this is the case.

Ninepoint Partners LP, based in Toronto, is an independent investment management business with approximately $6.5 billion in assets under management. According to Alex Tapscott, managing director of digital assets at Ninepoint, Bitcoin accounts for a significant share of the assets under the firm's administration. He stated, "Crypto assets are a fast-growing and essential asset class for us."

In January of this year, Ninepoint launched a Bitcoin Trust on the Toronto Stock Exchange. On May 6, the Bitcoin Trust was converted to an ETF. Following the announcement of Ninepoint's Bitcoin ETF, Tapscott noted that the firm decided to offset 100 percent of the fund's carbon footprint in order to provide green exposure to interested investors:

“By covering the cost of Bitcoin's carbon impact, we are providing investors with a green Bitcoin exposure alternative. We believe this is a one-of-a-kind and crucial offering that will persuade investors who have been debating whether or not to buy Bitcoin.”

Ninepoint is cooperating with a number of projects, according to Tapscott, to assist assure the firm's green Bitcoin ETF. Ninepoint, for example, is collaborating with the Crypto Carbon Ratings Institute, a research business focused on the environmental impact of cryptocurrencies, as well as CarbonX, an environmental fintech firm.

The Crypto Carbon Ratings Institute, according to Lena Klaassen, co-founder, employs its own methodology and research to calculate the best assessment of the Bitcoin network's true carbon footprint. The Crypto Carbon Ratings Institute, in collaboration with CarbonX, reports to Ninepoint on the Bitcoin network's portion of its ETF. CarbonX then employs their Zerofootprint strategy, which involves supplying equivalent volumes of CO2e (carbon dioxide equivalent) to offset emissions.

While Tapscott was unable to provide particular figures for the fund's carbon footprint, he said that this is due to the fact that the assets under management change as new investors join and the price of Bitcoin fluctuates. “Bitcoin's energy footprint varies according on its hashing rate. He explained, "This is a moving target that we alter monthly to reflect these developments."

Despite market volatility and the expense of carbon offsets being wholly funded by Ninepoint, Tapscott stated that the company believes this is the correct thing to do, both for the company's future and for the whole crypto sector. According to Tapscott:

“Many investors want exposure to Bitcoin, but many are concerned about its energy footprint, particularly institutions with Environmental, Social, and Governance (ESG) goals to meet.”

Green funds: Is this a trend that will continue?

While only a few crypto-asset management investment businesses have promised to go green, the actions of a few firms could spark a significant movement.

One River Digital Asset Management applied for a carbon-neutral ETF shortly after Ninepoint unveiled its green Bitcoin ETF. One River declined to comment on the topic with Cointelegraph, but Tapscott expressed his hope that Ninepoint's green project will serve as a model for the entire industry.

Although it's difficult to forecast the crypto space's future, BitMEX, a crypto derivatives trading platform, has announced its decision to become carbon neutral. Marathon Digital Holdings, a Bitcoin mining company based in the United States, also stated aspirations to attain carbon neutrality to the tune of 70%. According to Klaassen, the Crypto Carbon Ratings Institute is now seeing a trend for Bitcoin mining firms — particularly those that are publicly traded — to assess and resolve their own Scope 1,2, and 3 emissions.

Carbon-neutral mining operations are definitely conceivable, according to Paul Brody, blockchain head at Ernst & Young. “You have a green option if you solely aim to hold the Bitcoin you mine in a carbon-neutral operation,” he stated.

However, as Brody pointed out, it's possible that if someone transacts using Bitcoin, they won't be able to guarantee that the transaction would be executed by a carbon-neutral miner. Brody stated,

“You have no way of knowing what happened in those transactions. However, combining a carbon-neutral mining operation with some kind of carbon-offset against your other activities will almost certainly result in a largely green Bitcoin enterprise.”

A long-term Bitcoin solution

While Bitcoin ETFs, investment management businesses, and mining corporations have all pledged to become carbon neutral, a longer-term solution is still required for a green Bitcoin to become a reality.

Morris believes that in the long run, official standards-based agreements must be developed. Energy Web just created its Crypto Climate Accord to achieve this, which Morris highlighted had 45 signatories, including miners, crypto investors, foundations, exchanges, and more. The Accord's purpose is to make Bitcoin completely renewable by focusing on two factors.

The Accord, according to Morris, intends to raise awareness about "greenwashing." Clean crypto funds, according to Morris, are a source of doubt because blockchain networks that don't use traditional proof-of-work consensus don't waste nearly as much energy as Bitcoin.

As a result, Morris argues that the discussion about energy conservation should center on Bitcoin in particular. Morris further stated that the Crypto Climate Accord will take initiatives to assist large institutional and ordinary investors in making Bitcoin more environmentally friendly by bringing radical transparency to the Bitcoin network.

The establishment of standards, on the other hand, remains a difficulty that must be addressed. Morris claims that Energy Web is working on creating a global standard for calculating Bitcoin's carbon impact.

Furthermore, the crypto community must continue to work toward a Bitcoin solution that is ecologically friendly. “While a carbon-neutral road has been given forth,” Bill Tapscott, COO of CarbonX, told Cointelegraph, “the crypto community itself must embrace a responsibility to shift to a lower-carbon world.”

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