Bitcoin greenwashing? Lawmakers want clearer definitions of green energy
British lawmakers have called for stronger regulatory powers to counter the rise of financial greening, a fraudulent practice whereby a company exaggerates or fabricates the extent of its use of green energy.
A report from the House of Commons’ all-party finance committee calls on the UK government to clarify the definition of green investment and consult on the prospects of green labelling of financial products. The report notes that green claims about financial investments are often exaggerated and may not meet customers’ expectations:
It is clear that in some cases the labelling or description of green or climate-related indices does not necessarily correspond to consumers’ legitimate expectations of what they generally understand by this term.
The call from lawmakers came on the same day that Twitter CEO Jack Dorsey and Tesla CEO Elon Musk agreed on the potential for bitcoin (BTC) to become completely green and undermine its image as a polluting technology.
Musk and Dorsey were responding to a new report from Square (of which the latter is CEO) and Ark Invest, which looked at bitcoin’s potential to promote green energy. The report, titled Bitcoin – the key to a rich, clean energy future, claims that the energy-hungry nature of bitcoin, combined with renewable energy sources, could provide a solution to the problem of wasted renewable energy resources in times of plenty.
Investors’ desire to partner only with environmentally responsible companies has led to an increase in ESG investing, which includes environmental, social and corporate governance factors as important considerations in SRI.
The CEO of bitcoin producer Argo Blockchain, Peter Wall, told Cointelegraph that he has seen an increase in conversations about ESG in the mining sector in recent months. However, Mr. Wall noted that not all of these documents appear to be authentic:
There has certainly been a lot of discussion about GSE in the crypto space in recent months, which is great and moves things in the right direction. But talk without action is not enough and can lead to cynicism.
Argo is a bitcoin mining company that uses renewable energy in the form of hydroelectric power at its various mining farms in Canada. The company’s share price is currently 4,000% higher than last year. The company recently acquired a 320-acre site in Texas to expand its mining operations in the United States.
Wall joined recent calls by UK lawmakers for businesses to support their green energy requirements:
We believe that the most important step in preventing greenwashing is to ensure that companies can, and do, validate their claims and demonstrate that they are making a genuine effort to have a positive impact on the environment.
According to Wall, demand from environmentally conscious investors could naturally accelerate a process to provide clearer definitions of green labeling.
It is essential to mitigate the effects of climate change. It is therefore important to ensure that companies do all they can to reduce greenhouse gas emissions and their impact on the environment. Investor demand may facilitate this, and clear guidelines are needed for companies to invest in cleaner technologies, Wall said.
Not everyone agrees that the future prospects of bitcoin are as green as previously thought. According to the BBC, bitcoin critic and author David Gerard called the Square/Ark document a cynical exercise in bitcoin greening.
The reality is that bitcoin runs on coal, Gerard told the BBC, referring to a recent accident at a coal mine in Xinjiang, China, which left bitcoin miners temporarily unable to produce new coins.
That Bitcoin relies on fossil fuels from China is undeniable, but compared to the resource consumption of the existing fiat system, its environmental impact seems far less excessive.
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