This week, KPMG, a global network of professional firms, one of the Big Four accounting organizations, published the results of its research that emphasized the positive impact of the Bitcoin protocol on the three pillars of ESG: environmental, social, and governance.
Daniel Batten, the co-founder of CH4 Capital and a prominent ESG analyst, believes KPMG’s report “Bitcoin’s role in the ESG Imperative” to have a fundamental importance.
“No matter what your view on ESG, demonstrating how Bitcoin makes positive contributions [to environment, social and governance initiatives] is critical to both mainstream and institutional comfort,” he commented.
According to the expert, the report is an “important moment, because it represents for the first time a mainstream financial institution having gone through a thorough due diligence process on Bitcoin.”
Three pillars of Bitcoin
The research represents a detailed and thorough analysis of ESG and its three pillars, starting with the environmental effects of Bitcoin mining which is the process of creating new coins that consumes gigantic amounts of energy and has caused quite a controversy. According to KPMG, the industry “is focused on driving towards Net Zero emissions.”
In its report, KPMG compares Bitcoin emissions to other global industries, including tourism and fashion and demonstrates that mining represents merely a fraction of the total energy consumption. The report provides several strategies aimed at decreasing Bitcoin’s carbon footprint, some of which include using renewable energy or recycled heat.
Daniel Batten commented that he was surprised by the detailed nature of the research. He said, “It’s usual for reports to let certain folklore slip through the due diligence process such as ‘but Bitcoin takes renewable energy away from other users’.” He gave credit to KPMG for paying attention to detail and publishing “non-obvious truths.”
Analyzing the social aspect of Bitcoin, the researchers busted the popular myth that crypto contributes to criminal activities. Elizabeth Warren, a U.S. Senator, has often claimed that crypto is a tool of criminals which contributes to social issues such as the fentanyl epidemic in the U.S.
To oppose these claims, KPMG describe Bitcoin’s opportunities for financial inclusion, such as supporting Ukraine in its war with Russia, improving energy access in Africa, and supporting minorities all around the world.
Finally, KPMG analyzes the governance aspect of Bitcoin, and its decentralized nature, one of its “most prominent features.” The researchers comment that Bitcoin’s rules cannot be amended by the authorities and indicate that the network has a “robust” governance structure with a “high degree of confidence.”
According to KPMG, Bitcoin ensures numerous positive effects as part of the ESG investing framework. The report ends with a series of questions for ecosystem players which can help users, miners, and other participants to assess their relationship with the ecosystem.
Daniel Batten concluded, “I think it’s an important report and a milestone the ecosystem should celebrate. It’s important people read reports put out by Bitcoin opponents,” even though “there is still much work to be done, with several mainstream news channels continuing to publish misinformation about Bitcoin with impunity.”
