Wall Street’s major financial institutions should bear the blame for supporting the emissions-heavy Bitcoin mining industry, as per a new report by Greenpeace USA.
The latest report by the environmentally-focused NGO, titled “Bankrolling Bitcoin Pollution,” takes a different approach compared to previous Greenpeace papers on the Bitcoin (BTC) mining industry. Unlike past reports that focused on BTC miners themselves, this one shifts the spotlight to Wall Street and the banking industry.
Greenpeace alleges that big finance is fueling Bitcoin mining by providing economic incentives, perpetuating the environmental risks posed by the industry. The report identifies Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard, and MassMutual as the top five financiers of carbon pollution from Bitcoin mining companies. In 2022, these institutions collectively contributed over 1.7 million metric tons of CO2 emissions, equivalent to the emissions from more than 335,000 American homes using electricity for a year.
According to Greenpeace, Bitcoin mining has evolved into a significant commercial sector where companies require substantial capital to establish facilities and acquire computing equipment. These miners rely on support from banks and asset managers, with Wall Street and the banking industry eagerly jumping on board to claim their share of the profits.
The report holds companies such as BlackRock accountable for promoting the mining industry and criticizes the lack of oversight regarding how investments from traditional finance firms enable carbon-intensive Bitcoin mining operations. Greenpeace also points out the lack of transparency in the crypto mining industry, making it challenging for investors, stakeholders, and regulators to make informed decisions aligned with green policies.
Greenpeace calls for financial companies involved in Bitcoin mining to disclose the emissions associated with their investments and underwriting services for Bitcoin mining companies. The NGO accuses Wall Street of funding climate change by providing financial support to the growing Bitcoin mining industry.
The report highlights the case of the Riot Platforms’ facility near Rockdale, which was financed by Vanguard, BlackRock, Morgan Stanley, and State Street. This facility was responsible for 526,000 metric tons of CO2 emissions in 2022, equivalent to the carbon footprint of 100,000 U.S. homes in a year.
Despite being a signatory to the Net Zero Asset Managers initiative, BlackRock had the third-highest carbon emissions from its investments in Bitcoin mining among the 540 financial institutions studied by Greenpeace. The NGO points out the discrepancy between financial institutions’ sustainability goals and their involvement in financing the crypto mining industry.
Greenpeace also criticizes companies like M&T Bank and MassMutual for issuing loans to Bitcoin miners in 2022, contributing to carbon emissions. The NGO accuses the Bitcoin industry of greenwashing and making false claims about its environmental impact, akin to tactics employed by the tobacco and fossil fuel industries.
In response to the environmental impact of Bitcoin mining, Greenpeace advocates for regulation and taxation to hold miners accountable for the environmental costs of their operations. The NGO supports U.S. President Joe Biden’s proposed Digital Asset Mining Energy tax as a way to incentivize miners to adopt cleaner practices.
In addition to taxation, Greenpeace suggests changing the consensus protocol from proof-of-work to proof-of-stake as a way to reduce energy consumption in Bitcoin mining. However, this proposal faces opposition from the Bitcoin community, which views it as a threat to the decentralized nature of the cryptocurrency.
Greenpeace’s report is likely to spark controversy within the cryptocurrency community, much like its previous reports. Despite potential pushback, Greenpeace remains steadfast in its mission to hold financial institutions accountable for their role in perpetuating the environmental impact of Bitcoin mining.