KPMG Publishes a Paper on the Positive Role of Bitcoin in the "ESG Imperative". Better Late Than Never!

By ssaurel | In Bitcoin We Trust | 7 Aug 2023

Ever heard of ESG?

Yes, that famous acronym that was so fashionable in the late 2010s for investors the world over that BlackRock made it its hobbyhorse for a time.

ESG is an international acronym used by the financial community to designate the environmental, social, and governance criteria that generally constitute the three pillars of extra-financial analysis.

For several years, proponents of ESG criteria have not hesitated to criticize Bitcoin in this regard. They took the opportunity to spread lies, as they often do about Bitcoin.

A little over two years ago, I told you that Bitcoin's ESG score was already very high and that it would continue to improve drastically in the future:

"The Truth About Bitcoin and the Environmental, Social and Governance (ESG) Issues"

With almost 60% of the electricity used by the Bitcoin system now coming from renewable energy sources, it's safe to say I wasn't wrong. The situation has improved even further.

However, ESG criteria have been losing ground for several months now.

Precisely since BlackRock, through its CEO Larry Fink, decided to leave ESG criteria aside. Why is this? Because BlackRock lost some very wealthy American clients in 2022 as a result of its ESG commitments. So Larry Fink found a way out by saying it wasn't that important anymore.

Just as only the lure of profit had brought him to these ESG criteria, it was also the fear of losing money that drove BlackRock to put them aside. Classic.

Just as BlackRock had criticized Bitcoin, which Larry Fink had described as an index of money laundering, the situation changed drastically in 2023. BlackRock now recommends investing in Bitcoin and intends to launch its Bitcoin ETF based on the spot market.

As you can see, you shouldn't attach so much importance to what these powerful people say, because they only go where their interests lie.

For your part, as always, I urge you to do your own research so as not to get caught up in the narratives that some people try to propagate and then take advantage of. That's why I've always remained loyal to Bitcoin because the guarantees offered by the Bitcoin protocol have remained unchanged since its creation.

So the reasons why I decided to buy Bitcoin haven't changed. In fact, I believe that things keep proving Bitcoin right, and that time is on its side.

That said, we can see that since BlackRock decided to come into the Bitcoin world, a new narrative is taking shape. All of a sudden, Bitcoin isn't as dangerous as it used to be. Bitcoin is no longer as disastrous for the environment. Bitcoin is even becoming useful.

Once BlackRock has its ETF, you can be sure that Larry Fink will tell you that Bitcoin is good for the environment. It's all about the money.

Everything is falling into place for this change of narrative around Bitcoin.

The latest example? KPMG has just published a 12-page document entitled “Bitcoin’s role in the ESG imperative: An overview of the opportunities and creatives approaches that deliver value and drive trust with key stakeholders”.

It's a far cry from the accusation that Bitcoin is an environmental disaster. Yet this type of attack was the norm just a few months ago. Yes, but since then BlackRock has given Bitcoin credibility. As I often tell you, Bitcoin doesn't change, but it changes the people around it. Classic.

I urge you to read for yourself this 12-page document where KPMG first starts talking about Bitcoin Mining and the Proof-of-Work (PoW) consensus algorithm:

In its document, KPMG even expresses surprise that Bitcoin consumes so little energy, given the exaggerated criticism that has accompanied it for several years:

After all, Bitcoin only consumes around 0.55% of global electricity use, which is equivalent to the amount of energy required to run tumble dryers.

It's a far cry from the disaster that anti-Bitcoin point to because they don't understand just how much the world stands to gain from hard money like Bitcoin:

Since the usefulness of Bitcoin is very real, the real challenge lies in the possible strategies for continuing to reduce the carbon footprints of the Bitcoin system.

The first strategy put forward by KPMG is a classic one: the use of renewable energies to reduce costs and encourage increased production. For KPMG, “Bitcoin mining has shown an ability to help balance electrical grids given its ability to quickly curtail its energy use during times of high demand”:

The second is what KPMG calls “Demand Response”:

“In addition to being a buyer of last resort when demand is low, Bitcoin miners have the opportunity to serve as a flexible load through participation in demand response programs that help balance electrical grids. This is accomplished by the interruptible nature of mining operations in that they can curtail their power usage at a moment’s notice in order to give that power back to the grid in the event that demand exceeds available supply.”

The third strategy is to recycle the heat generated by Bitcoin mining. Some Bitcoin miners have begun to recycle this heat for other purposes such as heating homes, commercial buildings, greenhouses, and even swimming pools.

Something the anti-Bitcoin crowd will never tell you, but which KPMG cleverly highlights here with a crucial question: “Can Bitcoin mining's role in heating commercial and residential homes in a sustainable way continue to expand?”

On the environmental criterion of Bitcoin's ESG, the last strategy highlighted by KPMG concerns “Methane reduction”. I've talked to you about this subject before, with the possibility of converting flared gas into electricity, which is then used for Bitcoin mining:

"Bitcoin Is Not an Enemy, but an Ally in the Fight Against Climate Change"

KPMG also identifies a key point in the optimism that all Bitcoiners have for improving things for the environment with the Bitcoin system: “Bitcoin miners are identifying new and creative ways to source their power which has also resulted in the reduction of methane that enters the atmosphere”.

Bitcoin miners never rest on their laurels and are always looking to improve things. Whether they are criticized falsely or not, they are moving towards their goals.

On the social aspect, KPMG makes it clear that rather than wasting time on the “money laundering” aspect, which is only marginal with Bitcoin, it is more interesting to focus on the opportunities created by Bitcoin to move towards a more inclusive economy.

KPMG cites the following opportunities, which are obviously not exhaustive:

Financial inclusion to help the 1.4 billion unbanked on earth. I told you about it here too: “5 Reasons Why Bitcoin Fixes This for the Developing World.”
The example of fundraising for Ukraine.
Access to electricity in rural Africa.
Payments to replace cross-border payment systems such as Western Union or MoneyGram, which take advantage of their customers by charging exorbitant fees.

As I always tell you, Bitcoin is here to stay. Not everything is perfect, as I wrote in my book “The Truth About Bitcoin”, but for all that, why not focus on what Bitcoin can do well so that we can make the most of it for the benefit of as many people as possible?

In terms of the governance of the Bitcoin network, it couldn't be more transparent. Everything is open with Bitcoin, which is a permissionless system. Anyone can become a node in the network at any time if they decide to.

You then really become your own bank and no one can stop you from using your money as you wish. Even without running your own node, this guarantee is there, but it's always better to take full control in my opinion.

Finally, the immutability of Bitcoin gives you incredible guarantees in a world as uncertain as ours. If Bitcoin doesn't change, the people around it will change and sooner or later join its revolution. For several years, many opponents of Bitcoin have been realizing their mistakes.

Here, KPMG can only acknowledge the obvious advantages that this transparency brings to the Bitcoin system: “This results in a system that cannot be abused or misused by those in power or even individuals with ulterior motives due to its decentralization”.

Conclusion

KPMG has put forward an interesting analysis of Bitcoin that is, above all, free of negative preconceptions. KPMG states that “Bitcoin appears to provide a number of benefits across an ESG framework”. I'm not going to argue with you, as I already highlighted this point more than two years ago in this newsletter...

KPMG also highlights the innovative ways in which the Bitcoin mining industry has found to supply itself with electricity while helping to stabilize energy grids, reduce greenhouse gas emissions, and even recycle the heat produced by mining ASICs to heat commercial and residential properties.

Nobody knows what tomorrow will bring for Bitcoin, not KPMG, not me. However, we can't deny ourselves the opportunity to consider all the advantages that Bitcoin could bring us in the future. We might as well give it a try and see what happens, rather than blindly criticize it, as the anti-Bitcoin people do.

Feel free to read this KPMG document and share your analysis with me.

KPMG Publishes a Paper on the Positive Role of Bitcoin in the "ESG Imperative". Better Late Than Never!

Conclusion

More reading