American financial institutions are providing a lifeline to Bitcoin while it kills the climate
January 31, 2023
With Wall Street backing, Bitcoin is likely here to stay. How do we lessen its environmental impact?
© Bence Jardany / Greenpeace
Between the ongoing FTX debacle and widespread talk of a “crypto winter,” the eventual (and potentially imminent) demise of cryptocurrency seems inevitable to some. But here’s the reality: for better or worse, cryptocurrency is most likely here to stay — and financial institutions know it.
American financial institutions like BlackRock, Fidelity Investments, Goldman Sachs, Mastercard, and others offering Bitcoin products are doubling down on their Bitcoin investments in numerous ways — from purchasing stakes in Bitcoin mining companies to expanding transactional services. But in doing so, these companies also fund coal power, the number one electricity source for energy-hungry Bitcoin mining worldwide. According to Cambridge Bitcoin Electricity Consumption Index (CBECI), coal and other fossil fuels (oil and gas) account for almost two-thirds of the total electricity mix (62.4%) for Bitcoin mining – taking us in the exact opposite direction we need to be going to combat climate change.
These financial institutions want to have it both ways. On the one hand, they present stories to the public about their climate goals and commitments. On the other, they embrace Bitcoin even though it’s contributing to catastrophic climate change.
BlackRock, particularly, is deepening its climate problem with a growing stake in Bitcoin. In December 2022, the company provided a $17m loan to Core Scientific Inc., a Bitcoin mining company that is shoring up climate-wrecking coal power infrastructure throughout Appalachia. The December loan follows $37.9 million of secured convertible notes to the same company, a 6.71% stake in Marathon Digital Holdings (MARA), and 6.61% of Riot Blockchain (RIOT). BlackRock also offers Bitcoin investments to institutional investors, all despite their commitment to achieving net-zero greenhouse gas emissions by 2050.
Fidelity Investments has also invested in Bitcoin mining, offers Bitcoin products to millions of their 401(k) customers, and has plans to debut a retail crypto trading platform despite their claims of sustainable investing.
Both Goldman Sachs and Mastercard are also expanding their stake in Bitcoin despite pledges for net-zero emissions by 2050. Goldman Sachs has begun trading Bitcoin futures with Galaxy Digital, while Mastercard is offering Bitcoin transaction services for its commercial customers despite stating in its 2017 Corporate Sustainability Report that “new research shows that cryptocurrencies like Bitcoin are inherently more energy-intensive than Mastercard’s payment network.”
These Wall Street firms are likely to be followed by others, potentially unleashing more Bitcoin products that could spur more mining and keep dirty power plants in operation. Some financial companies are even becoming miners by repossessing rigs backed by their loans to the mining companies.
Along with these companies’ varied financial interests in Bitcoin is the growing climate risk on their balance sheets. The U.S. Securities and Exchange Commission (SEC) proposed mandatory rules on disclosing climate-related information. With increased scrutiny from regulators and customers, companies denying that investments and services for Bitcoin are contrary to their climate commitments or ESG principles are in a no-win situation.
It does not have to be this way. Financial institutions looking to capitalize on risky, climate-wrecking cryptocurrencies can instead bring their clout and resources to the growing movement calling for a Bitcoin code change and invest in what matters most: a low-carbon sustainable economy and a thriving planet. It’s time to call on BlackRock, Fidelity Investments, and other Bitcoin backers to divest from climate-wrecking mining operations and publicly call for Bitcoin to change its code and end energy-hungry mining.
Ready to get involved in the Change the Code movement? We’re going after the major financial institutions that prop up Bitcoin and calling on them to join us – starting with Fidelity Investments. Sign our petition to tell Fidelity Investments to publicly demand a change to Bitcoin’s code so it stops fueling the climate crisis!