Galaxy Digital, the digital asset company owned by billionaire Michael Novogratz, has stepped up its use of renewable energy for crypto mining, after acknowledging that the industry was failing to convince investors of its green credentials.
In an interview, Novogratz said that Galaxy Digital – founded in 2018 with ambitions to become “the Goldman Sachs of crypto” – had already surpassed its goal set six months ago of getting 80% of its crypto mining from from renewable energies. He originally planned to reach this point by 2025.
The company is also launching a sustainability program – considered the first in the industry – covering issues such as energy consumption and employment practices.
“The market wants green mining. Crypto somehow lost a false narrative that it was bad for the environment,” he said. “But because we lose this narrative, [we thought] just pivot ourselves, and I think that was the right thing to do.
Bitcoin’s electricity consumption and its impact on the environment are among the main obstacles for many investors, who claim that cryptocurrencies are incompatible with environmental, social and governance obligations due to the energy-intensive mining process. new units of the room. Proponents, however, argue that the power consumption is justified given that miners also process transactions in exchange for the coins they receive.
According to Cambridge Bitcoin Electricity Consumption Index, the creation of new units of the digital coin – a process that involves warehouses of computers solving complex puzzles – consumes more than 128 TWh of electricity per year. That’s more than all of Norway or Ukraine, and enough energy to power every tea kettle in the UK for 29 years.
Nonetheless, Novogratz said bitcoin’s reputation as a dirty currency is “misinformation” that prevents critics of crypto from “even wanting to start a conversation.”
“The world has a power budget and I think if you’re in the crypto community you would say that’s a good use of a small amount of power, which provides an incredible amount of service,” he said. he declares.
Several Wall Street groups have entered digital markets over the past couple of years, but some of the world’s biggest investors, such as sovereign wealth funds, are finding it hard to ignore bitcoin’s impact on the planet.
In a sign of growing concern over this, Erik Thedéen, vice-president of the European Securities and Markets Authority, called last month for an EU-wide ban on the mining practice used to create bitcoins. .
Marion Laboure, research analyst at Deutsche Bank, said a survey of the bank’s customers showed the environmental impact of crypto remains a key issue, with more than half of respondents saying they had stopped buying bitcoin after delving into the details of bitcoin’s electricity consumption.
“Mining a single bitcoin consumes a larger carbon footprint than nearly two billion Visa transactions,” Laboure said in December.
Novogratz said the share of renewables in cryptocurrency mining has steadily increased since China banned mining there in May last year. As miners were forced to move to new sites, some migrated from coal to wind and other renewable energy sources. The Bitcoin Mining Council’s latest calculation puts the share of renewable energy in mining at 57%. The latest data from the Cambridge index, compiled before the Chinese mining crackdown, puts it at 39%.