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Would upcoming anti-money laundering and environmental regulations from the government be the downfall of bitcoin and cryptocurrency? Some think so; we believe it will lead to one of the largest bull runs to occur in the history of the cryptoverse and specifically for Bitcoin.
Firstly, for this to make sense, one must understand an acronym in finance called ESG. Largely thanks to president Joe Biden and the coronavirus, the concept of Environmental, Social, and Governance (ESG) priorities are now being pushed for many institutional investors.
ESG
Investment managers are now often inclined to invest in companies of a high “ESG Score” These investment managers are registered by the SEC. Publicly traded securities are favoured by ESG score attributed to them by data analysts. This is already the case in an index from Canada:
The companies with a higher ESG score are seen as more attractive to investors and are included in index funds or mutual funds which offers significant retail investor exposure to the asset. The reason this is important is that investing in Bitcoin is ESG investing.
No, seriously. Investing in Bitcoin is ESG investing. There are many ESG backers who believe BTC is promising. Let us take a look at this from a technical standpoint and break down each component and how it relates to BTC.
Environmental
Bitcoin has inherent mechanisms to incentivize location independent energy sources and connect them to the grid where previously it was not possible. In other words…
BTC is quite literally the only profitable use of energy that does not need to be connected to human society in the world. The way this would work is almost like Bitcoin acting as a “buyer of last resort” for the entire energy market.
Cathie Wood (ETF manager) explains this:
Tesla will be a part of the solution. Power walls, cars, panels, roofs, and more can offload excess energy to make renewables more profitable by mining. This is extremely attractive to both the consumer and Tesla. But, she also says, who has put lots of money into BTC.
Cathie Wood and ARK Invest are some of the largest shareholders in Tesla, and their firm’s funds are widely popular. They actually wrote a research paper WITH SQUARE on the promises of solar bitcoin mining, with particular use cases hinting at Tesla.
Now don’t you also find it odd that Tesla invests in Bitcoin, Elon Musk agrees with Jack here that BTC promotes renewable energy, then tweets about it negatively later and make the price fall? It’s not like he brought this issue up without a solution for it (more on this later).
Social
BTC promotes renewable energy and provides an economic foundation that empowers countries as we have never seen before. With it, we can monetize desolated areas using green energy. El Salvador is a prime example of this, already becoming the first to adopt it as currency.
This is even more significant for all of the countries with rampant inflation. Currencies are often belittled in value leaving their own citizens with almost nothing. BTC provides a way for the unbanked to become “banked” and instantly connect to the grid no matter their location.
Governance
BTC is unique in the way its governance is decentralized and anonymous. Miners form a network of computers that come to a consensus to verify the rules implemented on the blockchain. This is a concept extremely attractive to the ESG crowd.As mentioned above, “Investing in Bitcoin is investing in ESG.” The significance of this cannot go understated, because it will be the argument needed for institutional adoption of BTC. Several key players in the financial industry know this…The main “FUD” surrounding Bitcoin at the moment are the exact arguments amongst the ESG crowd that needed to be addressed further. This is no coincidence and is what we believe will become the institutional framework for BTC on a national level. Straight from the SEC:
But, it gets even more interesting. After a meeting with Elon Musk, North American Bitcoin miners agreed to begin reporting energy usage of renewables. This led to the creation of the Bitcoin Mining Council, with many top mining pools included.
This is significant because, under the current SEC rules for zero-emission credits, they state the importance of not allowing double-spending, and disclosing all details regarding the use of renewable energy for groups involved. Sounds like BTC will be very useful for Tesla.
Tesla actually makes significant revenue from selling zero-emission credits to other companies, which they get by selling zero-emission vehicles. Thirteen (13) states require these credits to allow auto manufacturers to sell in their area, and Bitcoin could broaden this market to all renewables.
Still not following?
Well, mining pools in the council have begun selectively mining green BTC, which they believe they can sell to institutions at a premium. We know institutions are hungry for Bitcoin, but it is challenging to get it right now due to ESG issues…
Will BTC monetize the green energy market? Will Tesla integrate solar research for mining done by Ark? Will Elon Musk offer institutions a certificate of renewable energy credit in the form of Green Bitcoin charged at a premium? Will this allow the SEC to put BTC on an ETF?
You decide the answers to these questions… We believe key players like Elon Musk, Cathie Wood, and Jack Dorsey have been working for months on the groundwork for a green BTC ETF. Cathie Wood actually confirms that a BTC ETF may happen as soon as THIS YEAR.
Last Thoughts
The current narrative is that the U.S. government is scared of bitcoin, with plans to regulate it to the point or to the extent of banning it. If that were true, why would Joe Biden’s top White House advisor own upwards of $1M worth of BTC?
It is also highly unlikely a widely renowned blockchain analyst was appointed to the Lead Financial Policy Transition Team if that were their plan. This nominee has testified multiple times before Congress mentioning the legitimacy of blockchain technology.
There is obviously something deeper going happening. What we have described is exactly what Bitcoin needs to land on an ETF, with exposure to accredited investors and millions in the retail markets. Nothing that is occurring is a mere coincidence. Our mission is to be your leading resource for learning and exploring the world of cryptocurrency, finance, and alternative investing.Since most of our content is FREE, your support goes a long way to helping us continue providing you with value. Here are some ways you can help:
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