Investment manager

ERShares: Why This Investment Manager Isn’t Investing in Bitcoin

By the ERShares team

ERShares‘s exclusive methodology, the Entrepreneur Factor, has integrated ESG factors since its creation. ESG is an integral part of ERShares’ investment philosophy and as a result, the firm rarely faces a trade-off between investment opportunities and ESG policy compliance throughout the investment process. .

The company positions itself as a thought leader and has taken measurable steps to encourage the companies it invests in to consider ESG angles. They realize that beyond encouraging particular ESG initiatives at previous companies, it is much more critical and impactful to raise awareness of the ESG issues at hand.

Bitcoin’s energy consumption and environmental impact now have hugely significant unintended consequences than mainstream stories suggest. Therefore, the ERShares team worked to pinpoint the problem and oppose Bitcoin as it uses a considerable amount of energy, the proportion of renewable energy used remains unclear and the regulations regarding cryptocurrency in the together remain nebulous.

Bitcoin Mining electricity consumption, emissions too high

Blockchain technology, despite being an incredible technological advancement, has some amazing and obvious environmental footprints.

Energy consumption is rooted in the “crypto mining” that makes digital currencies energy-intensive the way they are. Researchers estimate that “mining Bitcoin, the most popular blockchain-based currency, uses more electricity than entire countries like Argentina” (New York Times).

Although it represents only a small part of total global transactions, the carbon footprint involved compares to the carbon footprint of entire nations. Bitcoin’s energy emissions alone can further exacerbate global warming far beyond levels that can potentially lead to even more adverse effects of climate change.

Gradually, the environmental impact of cryptocurrencies is beginning to antagonize climate policy. If left unchecked, Bitcoin mining in China, where an estimated two-thirds of global blockchain mining takes place, could prevent the world’s biggest polluter from achieving its goals. climatic. China’s Inner Mongolia region recently said it was preparing to ban the practice because it hindered the province’s efforts to meet new carbon emissions targets set by the national government” (New York Times). As a result, governments around the world are beginning to crack down on crypto mining and lock in new policies on climate change.

ErShares’ position on Bitcoin

ERShares has set its own standards by maintaining a clear policy of not investing in Bitcoin for this very reason. As an extension of this, most of their employees have adopted this policy in their personal portfolios for the same reason.

The ERShares team also raises public awareness through their media feeds. For example, Coinbase (COIN) made history as the first major cryptocurrency company to list its shares on a US stock exchange, pushing its valuation to nearly $100 billion. (New York Times) While this was hailed as a landmark moment for global digital currencies, the company also addressed the title’s negative impact on environmental and regulatory issues that have been growing since its recent debut.

Within the financial sector, the energy consumption of digital currency can be considered insignificant compared to the implications of traditional banking. Therefore, ERShares ensures that investors are more aware of the Bitcoin system and its indirect effect on ESG.

Efforts are being made to make cryptocurrency technology more environmentally sustainable. Yet until they are enacted, ERShares will continue to oppose Bitcoin and raise awareness as a thought leader within the global financial industry.

Entrepreneurs: “Aware of the long-term consequences”

Behind the companies ERShares invests in are entrepreneurs who work as thought leaders, highly aligned with the investment manager’s own team culture. These companies are created by entrepreneurs who have identified pain points in their personal lives and continue to develop new solutions. ERShares’ academic research also dates back twenty years and demonstrates the consistent outperformance of competition due to entrepreneurs creating a unique culture. On the whole, they are aware of the long-term consequences and exploit their resources in a productive and allocative way.

Beyond the fundamental issue of Bitcoin, entrepreneurs are thinking about innovation differently and considering the potential negative implications of disrupting innovation. As such, ERShares strongly believes that the companies they invest in and present to their investors as opportunities strive to embed the same level of awareness within their organizations as the team does internally at ERShares.

ERShares is an investment management firm that focuses on entrepreneurial stocks. Their flagship ETFs are the ERShares Entrepreneurs ETF (ENTR) and the ERShares NextGen Entrepreneurs ETF (ERSX).

Past performance is not indicative of future results. Please refer to the following disclosures:

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.