ARK Investment Management founder Cathie Wood thinks she knows who’s to blame for the recent plunge in cryptocurrency prices — Elon Musk and the ESG movement.
Speaking Thursday at CoinDesk’s Consensus 2021 conference, Wood said “a lot of institutional buying went on pause,” and that “It was precipitated by the ESG movement and this notion, which was exacerbated by Elon Musk, that there are some real environmental problems with the mining of bitcoin.”
Recent reports have found the energy usage behind crypto mining is comparable to that of some medium-sized countries, and much of it is coal powered; crypto bulls have challenged those findings.
While volatile even under the best circumstances, bitcoin’s latest fall was precipitated by Musk tweeting May 12 that Tesla Inc.
would stop accepting bitcoin as payment for its cars, citing excessive fossil-fuel usage in crypto mining. Musk has since said he’s working with developers and miners on more eco-friendly crypto-mining processes. Since then, some cryptos, including bitcoin
have lost more than 50% of their value from recent peaks.
“Elon probably got a few calls from institutions,” Wood said in the CoinDesk interview, noting that BlackRock Inc.
is Tesla’s third-largest shareholder.
BlackRock CEO Larry Fink “is focused on ESG and especially on climate change,” she said. “I’m sure BlackRock registered some complaints and perhaps there are some very large holders in Europe who are extremely sensitive to this.”
Investors have been flocking to ESG — environmental, social and governance — themed assets in recent years as socially responsible investing has caught on.
See: Investors may be willing to sacrifice returns for ESG — but here’s where they haven’t had to, says Deutsche Bank
Recent moves aside, Wood predicted Musk will be a positive force for bitcoin in the long run, and may even help reduce its environmental footprint. “He has encouraged a lot more conversation, a lot more analytical thinking. And I do believe he’s going to become a part of the process,” she said.
Since tumbling last weekend, bitcoin prices have gained 13% over the past five days, though are still down about 30% over the past month. Ethereum
has rallied more than 30% this week, and dogecoin
is up 11%; both have made slight gains over the past month, according to data from Kraken.
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