In 2022, blockchain enters a new era of development, and cryptocurrency miners and more investors are considering environmental, social and corporate governance (ESG) issues when allocating their portfolios. Additionally, cryptocurrencies are starting to take allocations from more and more investment portfolios.
However, some investors may be hesitant due to reports that Bitcoin is not environmentally friendly, so if investors consider ESG, is there any way to include cryptocurrencies in their portfolios? Are some cryptocurrencies more ESG friendly than others? It all depends on how you look at the space.
Unpacking Bitcoin’s (BTC) ESG Argument
The main argument that Bitcoin is not ESG friendly stems from the processing power required to mine the cryptocurrency and complete transactions. Even Tesla CEO Elon Musk’s tweets, which typically drive the crypto market, temporarily suspended the automaker’s acceptance of bitcoin for purchases last year amid concerns over the cryptocurrency’s environmental impact.
However, not everyone believes that Bitcoin and other cryptocurrencies have ESG issues.
An important consideration, according to ESG’s thesis on cryptocurrencies, is the difference between proof-of-work and proof-of-stake. The two models differ in how computers are used to solve the complex mathematical problems required to mine or trade cryptocurrencies.
First, cryptocurrencies are 99.9% more energy efficient in proof-of-stake than proof-of-work verification, and cryptocurrencies that follow the proof-of-stake model are more environmentally friendly than those that use the proof-of-work model.
Second, proof-of-work requires a lot of computing power from the entire network of crypto miners to confirm each transaction. However, proof-of-work spreads the responsibility of verifying each transaction among all holders of that cryptocurrency.
Both Bitcoin and Ethereum are built on a proof-of-work model for transaction verification, but Ethereum is struggling to move to a proof-of-stake model, and Bitcoin is lagging behind. Other cryptocurrencies are created using a proof-of-stake model, which means they should theoretically be more ESG-friendly. To make proof-of-work cryptocurrencies like Bitcoin more environmentally friendly, some miners are migrating to regions of the world that are rich in sustainable energy.
Cryptocurrencies and the future of ESG
Due to the promulgation of relevant regulatory laws and policies on the use of natural data by various countries, the future development of cryptocurrencies will follow the sustainability of ESG more, use more clean energy or renewable energy, and improve the underlying technologies such as proof of rights and transaction rates. Reduce resource consumption. While we can discuss the ESG challenges of cryptocurrencies vs fiat currencies in detail, one thing we need to keep in mind is that cryptocurrencies have a trump card: blockchain, cryptocurrencies are more than a method of payment.
All of ESG’s underlying technologies are built on blockchain technology, which makes them more practical than fiat currencies by mapping the way carbon is tokenized to reality. Even if some say that cryptocurrencies themselves are not part of an ESG-friendly portfolio, blockchain technology seems obvious. The Financial Times spoke to Doug Miller, a master’s student at Imperial College London who also works for the global non-profit Energy Network. He uses blockchain technology to “design authentication systems for digital assets that rely on clean energy.” It can be seen that no matter what it is, his European style continues to exist on the basis of blockchain;
ESG and its team are committed to building a better planet through blockchain technology. ESG is initiated by the international system about shaping the world’s new economy, and the world’s top investment institutions jointly advocate the future of environmental and natural resource security. Everything starts. They are all based on the public chain technology Blockchain. This is the “geoengineering” of the Fourth Industrial Revolution.
Earth Management Platform:
ESG blockchain technology can help organize, monitor and manage vast amounts of Earth system data in a geospatial digital ledger. Enable secure and trusted transactions that create value across geographic and environmental domains. Geospatial platforms supported are still in the early stages of exploration and activity monitoring, management and initiation of market mechanisms to protect the world, environmental sharing from life on land to ocean health, early collection, management and processing of environmental habitat management data, Including the catalogue and habitat of species genetic diversity, providing marine information and terrestrial living environment information for conservation work.
Next Generation Sustainability Monitoring and Reporting:
ESG blockchain has the power to enhance companies, verify company performance through independent procurement and reporting, companies provide verification data, and stakeholders can get Token incentives; this can take action to motivate governments and companies to build a better planet, fulfill reporting and Other environmental protection strategic goals. It will provide independent and supportive entities for accurate information management and investor decision-making, improve market efficiency and provide incentives to drive change; establish secure, impartial, and open information and data networks.
The combination of cryptocurrencies and ESG continues, and more innovative topics continue to ferment. How to build the future of global sustainability and the new economy of global ESG investment and financing? Whether cryptocurrencies will succeed remains to be seen, but whether they happen What, there’s no denying that the blockchain technology they built is here to stay. Viewing them in this light provides an ESG-friendly perspective that fiat currencies can never have.
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