Novogratz starts ESG program to combat Bitcoin's dirty” image

Galaxy Digital, the company for digital assets owned by the billionaire Michael Novogratz, has strengthened the use of renewable energies for crypto mining after it has accepted that the industry cannot convince investors of their green references.

In an interview, Novogratz, Galaxy Digital-founded in 2018 with the ambition to become a "Goldman Sachs of Crypto"-had already survived his goal of relating 80 percent of his crypto mining from renewable energies six months ago. It was originally planned to reach this point by 2025.

The company also introduces a sustainability program - which applies first in the industry - that covers topics such as energy consumption and attitudes.

"The market wants to be green mining. Crypto has somehow lost a wrong story that it is bad for the environment," he said. "But because we lose this narrative, [we thought] just let us swing around, and I think that was the right one."

The electricity consumption of Bitcoin and its effects on the environment are among the most important obstacles for many investors who say that cryptocurrencies due to the energy-intensive process of shining new units of Bitcoin are not compatible with ecological, social and governance obligations. However, supporters argue that the energy consumption is justified, since miner also handle transactions in return for the coins obtained.

According to the Cambridge Bitcoin Electricity Consumpt, new units of the digital created coin - a process in which warehouses solve complex puzzles with computers - consumes over 128 TWh of electricity per year. This is more than in all of Norway or Ukraine and represents enough energy to supply all tea kettle in Great Britain for 29 years.

Novogratz said that Bitcoin's reputation as a dirty currency was a “misinformation” that keeps crypto critics from “just wanting to start a conversation”.

"The world has a power budget and I think that if you are in the crypto community, you would say that this is a good use of a small amount of power that offers an astonishing amount of services," he said.

Several Wall Street companies have entered digital markets in the past two years, but some of the world's largest investors such as sovereign funds find it impossible to ignore the effects of Bitcoin on the planet.

As a sign of the growing concern about the topic, Erik Thedéen, deputy chairman of the European Securities and Market Authority, demanded an EU-wide ban on mining practice for the production of bitcoins last month.

Marion Laboure, research analyst at Deutsche Bank, said that a survey among the bank's customers had shown that the environmental impact of crypto was still a central topic. More than half of the respondents stated that Bitcoin no longer bought after they had dealt with the details of Bitcoin's electricity consumption.

"Mining only a Bitcoin consumes a larger CO2 footprint than almost two billion visa transactions," said Laboure in December.

Novograms said that the proportion of renewable energies in cryptocurrency mining has increased steadily since China banned the mining there in May last year. When miners were forced to move to new locations, some changed from coal to wind and other renewable energy sources. The latest calculation of Bitcoin Mining Council estimates the proportion of renewable energies in mining to 57 percent. The latest data from the Cambridge index, which was put together before the Chinese mining was made hard, put it at 39 percent.