Among the most frequently mentioned criticisms of bitcoin mining is that it is an energy-intensive industry with potentially negative environmental implications.
In this day and age of investing, poor sustainability can chase market participants away, but bitcoin miners aren’t necessarily the environmental nuisance they’re perceived to be. In fact, many are increasing their use of sustainable energy.
That could be a positive for exchange traded funds such as the VanEck Digital Assets Mining ETF (DAM). DAM, which tracks the MVIS Global Digital Assets Mining Index, holds 25 stocks, and some of those companies are making inroads when it comes to renewable energy consumption.
“It is estimated that the global bitcoin mining industry’s sustainable electricity mix is now 59.5% or had increased approximately 6% year-on-year, from Q2 2021 to Q2 2022, making it one of the most sustainable industries globally,” according to the Bitcoin Mining Council (BMC).
Adding to the allure of bitcoin and DAM as assets with improving sustainability credentials is that the Bitcoin network itself is becoming more efficient, meaning that power consumption to run the network could be declining.
“Additionally, year-on-year it is estimated that the global Bitcoin Network’s technological efficiency grew by 46%, from 14.4 EH per gigawatt (GW) in Q2 2021 to 21.1 EH per GW in Q2 2022. This efficiency gain reaffirms the fact that as the Bitcoin Network continues to grow, it will become even more efficient over time,” added the BMC.
Increasing efficiencies and consumption of clean energy not only enhances the sustainability credentials of DAM components, but those moves can also lead to cost savings. That’s a potentially vital attribute at a time when investors are concerned about the impact that slumping cryptocurrency prices are having on miners’ profitability.
Other data points indicate that the bitcoin mining industry may eventually look back at the second quarter of 2022 as a turning point in terms of bolstering both efficiencies and sustainability.
“In the second quarter of 2022, the hashrate and related security of the Bitcoin Network improved by 137% year-on-year while energy usage only increased 63%. We observed a 46% year-on-year increase in efficiency due to advances in semiconductor technology, the rapid expansion of North American mining, the China Exodus, and the worldwide adoption of sustainable energy and modern bitcoin mining technique,” said MicroStrategy CEO Michael Saylor.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.