Accelerate Financial Technologies has launched a bitcoin-tracking ETF in Canada that offsets more than 100% of the estimated carbon emissions from associated bitcoin mining and transaction activities.
The ETF aims to offset more than the estimated carbon emissions indirectly associated with its bitcoin mining and transactions.
The Accelerate Carbon-Negative Bitcoin ETF has been listed on the Toronto Stock Exchange and is available in Canadian dollar (Ticker: ABTC CN) and US dollar (ABTC.U CN) share classes.
Bitcoin’s questionable carbon profile, due to the hefty power consumption required to conduct transactions on the bitcoin network, has increasingly been in the spotlight.
Earlier this year, The Cambridge Centre for Alternative Finance estimated the cryptocurrency’s energy usage to be 121.26 terawatt-hours per year, understood to be on par with a mid-size country.
As demand for sustainable investing continues to soar, product providers are taking proactive steps in allaying investor concerns related to bitcoin’s environmental impact.
The Accelerate Carbon-Negative Bitcoin ETF tracks movement in the world’s largest cryptocurrency by investing in front-month bitcoin futures contracts traded on the Chicago Mercantile Exchange.
The value of the CME Bitcoin Futures contract is based on the CME CF Bitcoin Reference Rate which aggregates bitcoin trading activity across multiple trading venues to approximate the US dollar price of one bitcoin as of 4:00 p.m. London time.
As the ETF utilizes derivatives rather than direct “physical” replication to gain exposure to bitcoin, the fund is actually not directly responsible for any of the cryptocurrency’s carbon emissions.
Regardless of this, however, Accelerate has commissioned environmental consultant H3M Environment to estimate the average carbon emissions associated with bitcoin mining and transactions that the fund would be responsible for if it was pursuing direct physical replication.
Accelerate then utilizes part of the ETF’s management fee to fund decarbonization initiatives with the aim of offsetting more than this estimated amount of carbon. The initial decarbonization project sponsored by the ETF will focus on planting mangrove trees in Madagascar.
The ETF comes with a management fee of 0.69%.
It is estimated that up to 10% of this management fee, or 6.9 basis points, will be required to support the fund’s decarbonization initiatives. For each $1,000 investment in ABTC, approximately one net tonne of carbon dioxide is expected to be sequestered per year.
Julian Klymochko, Founder and CEO of Accelerate, said: “From an ESG perspective, historically, bitcoin has had a mixed track record. Bitcoin’s distributed authority and immutable blockchain grant it strong attributes from a governance perspective. We also believe that the fact that bitcoin provides easy access to a predictable supply of truly sovereign money that cannot be manipulated by central banks or inflated by governments makes it one of the strongest ranking assets from a social perspective. However, given the bitcoin blockchain’s energy-intensive proof of work algorithm, the asset ranks poorly from an environmental perspective. Today, Accelerate changes this negative environmental outcome by offering a way to obtain exposure to bitcoin while benefiting the environment.”
Canadian investors have several options when it comes to bitcoin ETFs listed on TSX.
Horizons ETFs recently launched a pair of bitcoin funds that also use futures contracts to provide long or short exposure to the cryptocurrency. The BetaPro Bitcoin ETF (HBIT CN) and BetaPro Inverse Bitcoin ETF (BITI CN) come with management fees of 1.00% and 1.45%, respectively.
Meanwhile, there are four directly backed bitcoin ETFs in Canada. These include the $1bn Purpose Bitcoin ETF (BTCC.U CN) and $950m 3iQ CoinShares Bitcoin ETF (BTCQ.U CN) which come with management fees of 1.00%; Evolve Funds’ $100m Bitcoin ETF (EBIT CN), which has a management fee of 0.75%, and the $300m CI Galaxy Bitcoin ETF (BTCX.U CN), which costs 0.40%.