Sharing in Climate Chaos: Asset Managers and Banks’ Investment Prop up Climate-Polluting Bitcoin Mining Companies
June 6, 2023
Asset managers like Fidelity Investments, BlackRock, and Vanguard, and banks like Goldman Sachs, JP Morgan Chase, and Citigroup, have substantial shares in Bitcoin mining. These companies’ support has thrown a lifeline to the fossil fuel industry and is impeding progress on efforts to curb emissions.
© Tracie Williams / Greenpeace
Financial institutions and the fossil fuel industry endanger our ability to limit global warming to 1.5°C. The role of big banks and asset managers in driving the climate crisis is well documented, and campaigners have been pushing leaders in the financial services industry to align their portfolios with a 1.5°C pathway, including by divesting from the fossil fuel industry.
Most of these companies claim to be taking action on climate–but at the same time, they provide financial support to energy-intensive Bitcoin mining companies. Bitcoin mining is keeping coal alive– it’s responsible for reopening coal plants and uses as much energy as entire countries. And asset managers like Fidelity Investments, BlackRock, and Vanguard, and banks like Goldman Sachs, JP Morgan, and Citigroup, have substantial shares in Bitcoin mining. These companies’ support has thrown a lifeline to the fossil fuel industry and is impeding progress on efforts to curb emissions.
Bitcoin mining is the process of verifying and recording transactions on a digital ledger. In this process, mining companies use thousands of specialized computers known as mining rigs that consume country-level amounts of electricity to guess the correct answer to a specific challenge. The first computer to guess correctly gains newly minted Bitcoins as a reward. The system adjusts as network processing power grows, making this number-guessing game more difficult. Miners compete to be the fastest, and those with the most computing power will increase their chances of gaining tokens. Miners are incentivized to keep electricity costs low to increase their profit margin.
Today, miners’ electricity demand rivals that of countries like Sweden. A one-megawatt mine uses more energy daily than a typical U.S. home in two years. According to research by WattTime, 85% of the energy miners use in the U.S. is from coal and natural gas plants, providing a solid lifeline to the fossil fuel economy. Globally, coal power is the number one source for energy hog Bitcoin. This fossil fuel electricity creates enormous climate pollution of nearly 66 MtCO2e per year, equal to Singapore’s emissions. In the U.S. alone, meeting the power demands added by Bitcoin mining emits as much carbon pollution as 3.5 million gas-powered cars.
While GHG emissions destroy our climate, communities living near these mining operations suffer immediately from air, water, and noise pollution. A recent New York Times investigation, The Real-World Costs of the Digital Race for Bitcoin, provides an in-depth overview of the environmental and utility ratepayer impact of Bitcoin mining companies, highlighting both the climate and local pollution.
Following the investor money trail reveals that some of the largest U.S. asset management companies and banks have substantial shares in publicly-traded Bitcoin mining companies. As of April 2023, a Greenpeace analysis of data from the Bloomberg Terminal based on holdings and share prices reveals that the largest asset managers (BlackRock, Fidelity, and Vanguard) and banks (Goldman Sachs, Citigroup, and JP Morgan Chase) control shares across 24 Bitcoin mining companies in excess of $1.35 billion. Vanguard leads with the highest investment of over $615M, followed closely by BlackRock with nearly $600M. Fidelity tops the others with the most widespread shares across 22 mining companies. On the bank front, Goldman Sachs leads with $28M+ in shareholdings, closely followed by JP Morgan Chase with over $26M. JP Morgan Chase has investments across 17 mining operations.
These companies are blatantly ignoring Bitcoin’s climate impact and air, water, and noise pollution despite having environmental, social, and governance (ESG) investment criteria or net-zero climate goals. The pollution affecting people living near the mines is duplicitous to these goals. For example, Stronghold Digital, in which Vanguard, BlackRock, Goldman Sachs, and Fidelity hold shares, uses toxic coal ash to directly fuel its electricity needs. According to EWG, Stronghold has two waste coal-fueled generating facilities: the 85 MW Scrubgrass Plant in Venango County, Pa., and the 80 MW Panther Creek Plant, in Carbon County, Pa. Before Stronghold’s 2021 purchase of these coal plants, the plants were virtually non-operational with electricity generation and coal consumption reduced by 95 percent between 2014 and 2020. The waste coal that Stronghold burns for electricity is poor-quality coal discarded by previous coal-mining operations. This kind of coal has low energy content and high toxin levels. Burning waste coal is pollution-intensive, including carbon emissions, heavy metals, and air toxics that hurt communities closest to the mining facilities. Under Stronghold’s ownership, the plant has burned 830 percent more waste coal compared to 2020, and in 2022 waste coal consumption was up by about 1,800 percent over 2020 – the most since 2014.
Vanguard, BlackRock, Fidelity, JPMorgan Chase, Goldman Sachs Group, and Citigroup have invested over $700M in Riot Blockchain, with Vanguard and BlackRock leading the pack by far. Similar to other Bitcoin miners, Riot causes environmental and economic harm to residents living near the mines. The impacts include massive electricity and water use, utility rate hikes, and water, air, and noise pollution.
A New York Times investigation also found that Riot Platforms is the largest emitter of climate pollution amongst other U.S. mining companies. Riot Platforms’ excessive electricity use in Texas is largely fueled by coal power. Residents in Navarro County, TX, organized against Riot Platforms to stop the miner’s role in consuming massive amounts of electricity, increasing rates for water and electricity for residents, increasing air pollution, and causing excessive noise pollution.
How can companies such as Vanguard, BlackRock, Goldman Sachs, Fidelity, and the others that have invested in Bitcoin mining reconcile that with company climate and ESG goals? Clearly, those in charge of the company’s sustainability commitments cannot. These companies are turning a blind eye to these investments like other fossil fuel investments perpetuating climate chaos.
It doesn’t have to be this way. Asset managers and banks can publicly call for Bitcoin to change its code and reduce its electricity consumption by nearly 100%. These companies can also stop all fossil fuel investments, including those to climate-wrecking Bitcoin mining operations. If they care about keeping our planet livable, that’s exactly what they’ll do.