BlackRock, the world’s largest asset manager, is placing a big bet on Bitcoin that could drive up the digital asset’s price and its climate-damaging pollution. Despite pledges to reduce carbon emissions and acknowledgement that climate risks are investment risks, BlackRock is investing in dirty Bitcoin without acknowledging its energy intensity or carbon emissions. This is bad news for the planet.
In June 2023, BlackRock applied for an exchange-traded fund (ETF) tied to the price of Bitcoin. This first-of-its-kind product made headlines and was followed by a spike in the price of bitcoin.
An ETF is basically a way for investors to bet on Bitcoin’s value without having to actually buy and hold bitcoin, which can be tricky as well as risky. A Bitcoin ETF managed by a large company like BlackRock could attract many more mainstream investors. But the potential profits for BlackRock and investors would come at a sharp cost to the climate and the rest of society. When Bitcoin’s price and trading volume goes up, so does its energy consumption and carbon emissions. With Bitcoin’s annual carbon emissions already at the scale of a mid-sized industrial country, the world simply can’t afford to support Bitcoin’s price growth.
BlackRock’s ETF proposal builds on other products and services the company offers that enable investing in Bitcoin. In 2022, the company launched a private bitcoin trust that would let institutional investors bet on the price of Bitcoin. This was part of a larger effort to make it more convenient for investors to manage Bitcoin alongside their standard portfolios of stocks and bonds. BlackRock partnered with Coinbase, the crypto exchange company, to integrate Bitcoin into the Coinbases popular investment management platform called Aladdin which would let clients track their bitcoin holdings and trade bitcoin via Coinbase’s exchange.
BlackRock is also putting some of its massive assets into Bitcoin mining companies – the facilities that create Bitcoin’s large carbon footprint. Greenpeace USA research finds that BlackRock controls nearly $600 million worth of shares in Bitcoin mining companies and has shares in most of the large publicly traded miners. These investments are vital for mining companies to access funding for their energy-intensive facilities. For example, BlackRock controlled over 28 million shares valued at $300 million in Riot Platforms, which owns the most energy-intensive U.S. crypto mine in Rockdale, Texas that uses as much electricity as the nearest 300,000 homes. And nearly all that energy is supplied by fossil fuels.
BlackRock also has ties to Bitcoin miners keeping dirty coal power plants alive. The company owns $2.8 million worth of bonds in Marathon Digital whose mining facility helped keep the coal-fired Hardin Generating Station in Hardin, MT operating past its planned closure in 2018. In 2021, this led to 755,700 tons of CO2 emissions and local air pollution with 304 tons of sulfur dioxide and 245 tons of nitrogen oxides. BlackRock also controls a nearly 6% share in Greenidge Generation Holdings, a company that converted a closed coal plant to fossil gas in upstate New York to power a Bitcoin mine. Regulators and the public have scrutinized the facility for its pollution.
And when mining companies struggle financially, BlackRock has helped them stay afloat. When Core Scientific filed for bankruptcy in 2022, BlackRock joined a group of creditors that lent the company around $500 million, chipping in $38 million, and contributing another $17 million loan to help Core Scientific operate during bankruptcy.
Yet, BlackRock could turn its resources, expertise, and clout towards transforming Bitcoin and mobilizing stakeholders to work on innovative solutions that slash Bitcoin’s carbon footprint while maintaining its key features. Cryptocurrencies don’t have to use massive amounts of electricity. Most don’t, and they can change. Now is the time for BlackRock to acknowledge Bitcoin’s pollution and help solve the problem.
