A recent disclosure by crypto analyst Jamie Coutts, associated with Bloomberg Intelligence, has unveiled BlackRock's substantial involvement in Bitcoin (BTC) mining. The revelation may raise many eyebrows, given BlackRock's stature in traditional finance.
However, Coutts clarifies that BlackRock's entry into Bitcoin mining is not entirely unexpected. The asset management giant embarked on this journey three years ago, primarily investing in Marathon Digital, one of the largest publicly traded mining companies.
This move began during a period when the crypto mining industry faced scrutiny due to its heavy reliance on fossil fuels. Despite challenges and a less favorable year for miners in 2022, BlackRock, alongside Vanguard and State Street, continued to accumulate stakes in public miners, demonstrating their commitment to the sector.
One interesting aspect of this development is its potential impact on the ESG (Environmental, Social, Governance) credentials of these asset managers. Recent estimates indicate that more than 50% of Bitcoin mining energy comes from sustainable sources, offering hope for increased sustainability.
As Bitcoin's environmental attributes gain recognition, ESG-conscious institutional investors may view the asset more favorably. While the precise role of Bitcoin's ESG credentials in these investments remains unclear, it is likely that some level of ESG due diligence was conducted.
Something to worry about
Nonetheless, the growing involvement of major asset managers in BTC mining raises concerns about potential conflicts with the network's values. With these giants becoming dominant investors in publicly traded miners, accounting for a significant share of global hashing power, questions regarding misaligned ESG goals and transaction censorship emerge.
Arman Shirinyan
Denys Serhiichuk
