On the surface, it can be difficult to understand how Bitcoin and the environment, social and governing (ESG) investments can affect each other. However, the two are more closely linked than you can imagine.
“Bitcoin is nursing losses after the worst weekly drop in almost a year and according to one view, its long-term outlook could be even worse due to environmental concerns and stricter rules,” Bloomberg article explained. “The sheer amount of energy needed to mine Bitcoin and the prospect that governments will create more barriers to the largest cryptocurrency indicate that the token is losing ‘most of its value over time,'” BCA Research Inc. said.
Still, it has not stopped Bitcoin bulls from stacking into the cryptocurrency, which has aroused interest from institutional investors as well as the electric car giant Tesla.
Nevertheless, BCA Research claims that the clean energy needed to break the cryptocurrency outweighs its benefits related to simple payments via a digital medium. In addition, BCA Research sees government regulations as an additional barrier that Bitcoin must address in the long run.
“Many companies have enjoyed it up to Bitcoin to associate with the technical mystique of the digital currency, ”added BCA Research Chief Global Strategist Peter Berezin. “When ESG funds start to escape Bitcoin, the price will start a downward spiral. Keep away.”
An ESG ETF to consider if Bitcoin is not an option
For investors who are not ready to jump on the cryptocurrency yet, there are ESG ETF options to consider. One of them is it SPDR S&P 500 ESG ETF (EFIV).
The fund strives to provide investment results that generally correspond to the overall return performance of an index that provides exposure to securities that meet certain sustainability criteria (criteria related to ESG factors) while maintaining similar total industry weights as the S&P 500 Index.
To try to track the results of the S&P 500 ESG Index, the fund uses a sampling strategy, which means that it is not obliged to buy all securities represented in the index. In total, EFIV gives investors:
- Investment results that before fees and expenses generally correspond to the S&P 500 ESG Index.
- Potential ESG core exposure, based on focus on sustainability criteria and extensive market coverage for the flagship core S&P 500 Index.
- A low cost ratio of 0.10%, 27 points below the category average.
For more news and information, visit ESG channel.