Alternative Investments/Digital: Ninepoint’s Bitcoin ETF To Offset Carbon Footprint Of Bitcoin Holdings

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Ninepoint will buy carbon credits out of its management fees from the fund.

Bitcoin has been getting a lot of flak recently for the impact that its mining has on the environment. As verification computations get more complex, bitcoin mining rigs consume more and more energy for generating mining rewards. This process becomes a vicious circle when bitcoin prices are on a rally because it becomes more profitable to mine, and sell, the cryptocurrency. ETFs and other funds holding bitcoin are becoming increasingly concerned about the carbon footprint inherent in their holdings.

Ninepoint Partners make an innovative, ESG-friendly move

On May 6, Ninepoint Partners LP announced the completion of the conversion of their closed-ended Bitcoin Trust into the Ninepoint Bitcoin ETF.

Tracking the MVIS CryptoCompare Bitcoin Benchmark Rate Index, the fund stores its holdings in a segregated cold storage system using a dual-custodian structure with Cidel Trust and Gemini acting as the fund’s bitcoin custodians.

The fully physically-backed ETF holds approximately $270 million in bitcoin assets and charges a management fee of 0.70%.

According to Bloomberg|Quint, the fund manager will use a part of its management fee to soften the impact on the environment from bitcoin’s energy consumption. However, the firm did not disclose the amount it is spending on the move.

“For some investors who are concerned about the carbon footprint of mining, they may be wary of investing in a Bitcoin ETF,” said Alex Tapscott, managing director of digital assets at Ninepoint. “What we’re doing is creating what we hope is a solution to that problem and giving them the choice that they want and, frankly, that they need.”

How it works

Ninepoint is tying up with environmental software fintech-firm CarbonX to purchase carbon credits and support forest conservation projects.

It’s also collaborating with the Crypto Carbon Ratings Institute, which will, along with CarbonX, provide carbon footprint analysis.

The ETF trades on the Toronto Stock Exchange.

Related Story: Ninepoint Launches A Liquid Alternative Bond Fund

Image Credit: Flickr                                                   

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