• 18 June, 2024

BlackRock’s Bitcoin ETF Approval Hides a Dark Secret: Analysis

The Securities and Exchange Commission (SEC) has recently given its approval to BlackRock and some other firms’ for their bitcoin exchange-traded fund (ETF) launch, marking a major development for the cryptocurrency market. The decision is expected to open up avenues for more investors in bitcoin, providing them with a regulated and structured means of exposure to the cryptocurrency

BlackRock CEO, Larry Fink had earlier criticised the cryptocurrency Bitcoin during an Institute of International Finance meeting, referring to it as an “index of money laundering.” Fink, who leads the world’s largest asset management firm, expressed the view that Bitcoin highlights the prevalent demand for money laundering globally. He had emphasized that, in his opinion, Bitcoin serves primarily as a tool for illicit financial activities.

Moreover, in June 2023, BlackRock submitted an application for the development of an exchange-traded fund (ETF) linked to Bitcoin’s price, gaining attention as an unprecedented financial product. This development coincided with a significant upswing in Bitcoin’s value, prompting concerns from environmentalists regarding the environmental impact associated with the cryptocurrency’s energy-intensive characteristics.

The ETF, crafted for investors to speculate on Bitcoin’s value without owning the cryptocurrency, may attract a broader audience due to BlackRock’s esteemed management. However, concerns arise as Bitcoin’s surging price and trading volume align with heightened energy consumption and carbon emissions. With Bitcoin’s annual carbon emissions already comparable to those of a mid-sized industrial country, environmental advocates argue that fostering further price growth is unsustainable for the planet.

BlackRock’s ties to Bitcoin miners also extend to facilities that utilize dirty coal power plants. The company owns bonds worth in Marathon Digital, whose mining facility prolonged the operation of a coal-fired station in Hardin, MT, leading to substantial CO2 emissions and local air pollution. Additionally, BlackRock holds shares in Greenidge Generation Holdings, a company that converted a closed coal plant in New York into a fossil gas-powered Bitcoin mine, drawing regulatory scrutiny.

Despite BlackRock’s significant investments in Bitcoin-related ventures, critics argue that the company could leverage its resources and influence to address Bitcoin’s environmental impact. As cryptocurrencies don’t inherently require massive electricity consumption, environmental advocates suggest that now is the time for BlackRock to acknowledge Bitcoin’s pollution and actively work towards innovative solutions that reduce its carbon footprint while preserving its core features.

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