- Jacobi Asset Management announced its spot Bitcoin ETF as an ESG (environmental, social, and governance) compliant fund under EU regulations.
- Martin Bednall, CEO of Jacobi Asset Management and a BlackRock graduate, informed investors that the ETF aims for full decarbonization.
- According to estimates, the mining process consumes approximately 140 terawatt-hours of energy annually, which is equivalent to the total annual electricity production of Norway and Argentina combined.
The first spot Bitcoin ETF launched in Europe became an ESG compliant fund; however, researchers criticized the ETF for receiving the ESG label.
Jacobi’s Bitcoin ETF Receives ESG Label
Jacobi Asset Management announced its spot Bitcoin ETF as an ESG compliant fund under EU regulations. This signifies a bold intersection of cryptocurrency and ESG investments. By obtaining such classification, the fund is legally obligated to support ESG objectives according to EU regulations.
Jacobi FT Wilshire Bitcoin ETF joins a diverse portfolio of financial products categorized under Article 8, which encompasses approximately $6 trillion in assets. This news indicates a change in how ESG standards are applied in the financial realm.
Until this announcement, there was no example of a Bitcoin ETF being positioned as an ESG compliant fund according to EU guidelines. Martin Bednall, CEO of Jacobi Asset Management and a BlackRock graduate, informed investors that the ETF aims for full decarbonization.
The fund’s ESG status is based on its investment in renewable energy certificates (RECs). Jacobi’s rationale is that these RECs offset the carbon footprint created by Bitcoin (BTC) mining tracked by the ETF. It is claimed that these certificates provide sufficient funding for renewable energy projects to neutralize greenhouse gas emissions associated with Bitcoin’s energy consumption.
However, this label has received criticism from different circles, questioning the legitimacy of positioning a Bitcoin-focused fund as ESG compliant. Bitcoin mining is notorious for its massive energy consumption. Estimates suggest that the mining process consumes approximately 140 terawatt-hours of energy annually, which is equivalent to the total annual electricity production of Norway and Argentina combined.
What do the studies say?
A study by the University of Cambridge also shows that only 38% of BTC mining relies on sustainable energy, indicating a discrepancy closer to around 60% compared to industry claims.
Matthew Brander, a carbon accounting expert from the University of Edinburgh, criticized Jacobi’s decarbonization strategy as lacking credibility. According to Brander, RECs do not establish a direct link between digital assets like cryptocurrencies and renewable energy production.
Overall, Jacobi Asset Management has taken a bold step, which could open the path for thorough scrutiny by environmental experts and activists. However, it could also expand the scope of integrating Bitcoin ETFs into broader financial instruments in the West more effectively.
