Alpha-Centric ESG Research

Kyle Rudden

This is a follow-up to <a href="https://www.smartkarma.com/insights/esg-and-bitcoin-the-truth-lies-somewhere-between-benign-and-boiling-off-oceans" target="_blank" data-smartkarma-citation="insights:52134" rel="noopener">ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans</a>, in which I discussed the ongoing cryptocurrency/ESG debate, and explained the reasoning behind my slightly positive long-term opinion of the issue (near-term negative, however).Essentially, it boiled down to the balance of Environmental, Social, and Governance issues. Proof-of-Work cryptocurrencies (especially Bitcoin) are an Environmental nightmare. However, there is reason for optimism (e.g., Ethereum 2.0), and some long-term Social issues are major positives.Nevertheless, the raging firestorm over cryptocurrency's Environmental footprint will be foremost on the minds of many ESG-minded investors. They will want avoid crypto at all costs. That is easy regarding direct exposure – just don't buy Bitcoin, Coinbase, or any other crypto pure-plays.Indirect cryptocurrency exposure is a different story altogether. As cryptocurrencies become more mainstream, the potential for indirect exposure increases – in probability, degree, and number of possible vectors. Some are hard to miss (e.g., Tesla), but others are much harder to identify.Ergo, this Insight. It covers the first of several emerging areas of potential indirect crypto exposure, specifically the growing cadre of listed companies putting crypto on the books; holding Bitcoins in treasuries for a variety of reasons, but primarily as a supposed super-hedge against inflation.It is written for the never-Bitcoin environmentalist investor, but with a little imagination any pro-Bitcoin investor can just flip its messages upside down. After all, whether indirect cryptocurrency exposure is an ESG risk or an ESG opportunity is entirely up to you to decide, for yourself.

This is a follow-up to ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans, in which I discussed the ongoing cryptocurrency/ESG debate, and explained the reasoning behind my slightly positive long-term opinion of the issue (near-term negative, however).Essentially, it boiled down to the balance of Environmental, Social, and Governance issues. Proof-of-Work cryptocurrencies (especially Bitcoin) are an Environmental nightmare. However, there is reason for optimism (e.g., Ethereum 2.0), and some long-term Social issues are major positives.Nevertheless, the raging firestorm over cryptocurrency's Environmental footprint will be foremost on the minds of many ESG-minded investors. They will want avoid crypto at all costs. That is easy regarding direct exposure – just don't buy Bitcoin, Coinbase, or any other crypto pure-plays.Indirect cryptocurrency exposure is a different story altogether. As cryptocurrencies become more mainstream, the potential for indirect exposure increases – in probability, degree, and number of possible vectors. Some are hard to miss (e.g., Tesla), but others are much harder to identify.Ergo, this Insight. It covers the first of several emerging areas of potential indirect crypto exposure, specifically the growing cadre of listed companies putting crypto on the books; holding Bitcoins in treasuries for a variety of reasons, but primarily as a supposed super-hedge against inflation.It is written for the never-Bitcoin environmentalist investor, but with a little imagination any pro-Bitcoin investor can just flip its messages upside down. After all, whether indirect cryptocurrency exposure is an ESG risk or an ESG opportunity is entirely up to you to decide, for yourself.

Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors

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MicroStrategy Incorporated provides business intelligence software and related services.  The Company's technology platform enables departments and enterprises to deploy Web-based reporting and analysis solutions.  MicroStrategy also offers consulting, training, and support services.  Solutions are provided to retail, finance, telecommunications, insurance, dot-com, and healthcare industries.

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Microstrategy Inc Cl A (MSTR US)

Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors

Companies are increasingly embracing cryptocurrencies as a corporate treasury management strategy. This looks at some representative companies with...

Kyle Rudden

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