ETF billed as world first addresses top-of-mind ESG concern with cryptocurrency
Accelerate Financial Technologies has laid claim to launching the world’s first-ever carbon-negative investment fund.
The Accelerate Carbon-Negative Bitcoin ETF is now trading on the TSX, with options available for both Canadian dollar-denominated (ABTC) and U.S. dollar-denominated (ABTC.U) shares.
ABTC seeks to provide exposure to the performance of bitcoin by investing in derivatives that provide exposure to the cryptocurrency. To address some ESG concerns associated with bitcoin exposure, Accelerate also plans to fund decarbonisation initiatives in order to sequester over 100% of the estimated carbon dioxide emissions that can be attributed to bitcoin transactions ABTC is indirectly exposed to.
“Environmental, social and governance (ESG) concerns are top of mind for investors,” said Accelerate founder and CEO Julian Klymochko. “From an ESG perspective, historically, bitcoin has had a mixed track record.”
Klymochko argued that because of its distributed authority and immutable blockchain, bitcoin is strong from a governance perspective. By granting access to a predictable supply of truly sovereign money that’s beyond the ability of central banks or governments to manipulate, he added, the cryptocurrency can also be considered among the assets with the strongest social score.
However, given the bitcoin blockchain’s energy-intensive proof of work algorithm, the asset ranks poorly from an environmental perspective,” Klymochko said.
Working with a leading third-party environmental specialist, Accelerate said it is executing a global tree-planting campaign to sequester carbon emissions linked to bitcoin transactions that the ETF is linked to.
In an email to WP, Klymochko said it worked with H3M Environmental, a third-party environmental consultant, to audit Accelerate’s environmental claims and model associated with the new ETF.
“They determined that our tree-planting decarbonisation initiative sequestered over 60x the CO2 emissions produced by the ETF's bitcoin transactions,” Kymochko said.
In May, Ninepoint Partners announced plans to invest in decarbonization initiatives to mitigate its own bitcoin ETF’s carbon emissions exposure. But while Ninepoint said its ETF would have a carbon-neutral footprint, Accelerate is aiming for a more ambitious net-negative target. That would certainly appease some impact-investing advocates who maintain that going beyond net-zero is the way to reverse the negative impacts of greenhouse gases that have been released into the atmosphere for decades.
Up to 10% of ABTC’s 0.69% management fee will be allocated toward Accelerate’s annual tree-planting campaign, for each $1,000 investment in ABTC, an estimated one net tonne of carbon dioxide is expected to be sequestered per year. The firm currently views tree-planting as the most efficient and climate-positive way to sequester emissions, and is focusing initial decarbonization efforts on planting mangrove trees in Madagascar.
“The Accelerate Carbon-Negative Bitcoin ETF allows investors to diversify their portfolios while helping to fight climate change,” Klymochko said.