May 10, 2021
Canadian issuer is making its Bitcoin ETF carbon-neutral
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Ninepoint Partners LP is seeking to lessen apprehension about the energy usage of Bitcoin by dedicating a portion of its crypto ETF’s management fee to offset the fund’s carbon footprint.
“For some investors who are concerned about the carbon footprint of mining, they may be wary of investing in a Bitcoin ETF,” said Alex Tapscott, managing director of digital assets at the Toronto-based firm, referring to the vast array of computers worldwide that compete to confirm Bitcoin transactions. “What we’re doing is creating what we hope is a solution to that problem and giving them the choice that they want and, frankly, that they need.”
The effort comes as critics say Bitcoin’s environmental record has worsened while its price has skyrocketed. Bank of America, for instance, said recently the energy used by the network of computers that power the digital coin is comparable to that of many developed countries and rivals the emissions from major fossil-fuel users and producers.
Ninepoint, which has about US$6.5 billion in assets under management and institutional contracts, is partnering with environmental software fintech-firm CarbonX to purchase carbon credits and support forest conservation projects. It’s also working with the Crypto Carbon Ratings Institute, which will, together with CarbonX, provide carbon footprint analysis. Ninepoint didn’t disclose how much of the management fee would be contributed.
Ninepoint isn’t alone. One River Asset Management, whose crypto funds are backed by billionaire Alan Howard, said it’s developed a system that calculates the carbon cost of mining and buys credits to offset the impact. The company said it’s building carbon neutrality into its existing Bitcoin and Ether funds and is also planning to seek regulatory approval for an ETF with the same features.
“This is something that is, in my view, very important -- it’s going to be with us for a long time -- and so we need to figure out a way to ensure that Bitcoin can scale and reach its potential in a sustainable way,” Tapscott said by phone.
Ninepoint’s Bitcoin ETF converted from a trust to a fund on May 6. The Bitcoin fund is physically-backed and had roughly US$320 million in assets when it converted.
Canada was the first anywhere to carry the ETF label for a Bitcoin product. In the U.S., the Securities and Exchange Commission has yet to approve one, though at least 11 companies are looking to launch one -- nine of them have filed since the end of 2020, amid a run-up in crypto prices.
--With assistance from Claire Ballentine.