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London-based Jacobi Asset Management recently rolled out its Jacobi FT Wilshire Bitcoin ETF on the Euronext Amsterdam stock exchange, marking not only the first Bitcoin ETF available to European investors but also the first-ever to adhere to the European Union’s environmental, social and governance (ESG) guidelines. Notably, Jacobi tagged the ETF as an Article 8 fund, meaning it aligns with initiatives that foster social and environmental benefits.
According to Jacobi’s CEO, Martin Bednall, the fund’s portfolio is "fully decarbonized," thanks to its partial stake in renewable energy certificates (RECs). This investment move essentially offsets the energy-consuming nature of Bitcoin mining by supporting renewable energy initiatives. By purchasing these RECs, the ETF intends to counterbalance or even surpass the energy expenditure linked to its Bitcoin holdings.
Despite the eco-conscious framing, the fund’s approach has met some skepticism. Academics have noted that, given the substantial energy needs for Bitcoin mining, the ETF would need to secure an immense quantity of RECs to genuinely counteract its carbon footprint. This could mean that the fund would have to go beyond merely matching but substantially exceeding the energy used by its cryptocurrency assets.
Originally planned for a 2022 rollout, the Jacobi FT Wilshire Bitcoin ETF debuted on August 15, more than a year later than initially intended. The product is unique because it is physically backed by actual Bitcoin, offering investors direct exposure to the volatile cryptocurrency, along with the promise of being a more eco-conscious financial option.
To verify its green claims, the ETF utilizes external data to estimate the Bitcoin network's energy use. Once calculated, the fund buys and "retires" the corresponding RECs. All these transactions are logged on a blockchain service, enabling investors to independently corroborate the environmental claims made by the fund.
By introducing this new Bitcoin ETF, Jacobi Asset Management sets a precedent in Europe, offering a financial product that marries cryptocurrency investment with ESG guidelines. Whether the fund can live up to its eco-friendly billing, however, remains an open question.
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