Bitcoin ETF
Introduction
The a Bitcoin ETF, holding approximately 40,000 Bitcoin (BTC), is committed to responsible investment management, including transparency in environmental impact. Bitcoin’s energy-intensive nature contributes indirectly to carbon emissions, raising concerns for institutions that seek to minimize their Scope 3 emissions. Bitwise utilizes Bitcoin Emissions Certificates (BECs) as part of its end-of-year sustainability report, aligning its Bitcoin holdings’ carbon accounting with the Greenhouse Gas (GHG) Protocol standards.
This case study outlines an approach to offsetting emissions using BECs and draws a parallel to corporations that reduce Scope 3 emissions related to business travel by purchasing Sustainable Aviation Fuel (SAF).
Process: How ETF Fund Managers Use BECs for Annual Scope 3 Emissions Reporting
Step 1: Determining the BEC Requirement
For its annual report, they calculate the required BECs based on the amount of Bitcoin it holds (40,000 BTC) and the duration of holding:
With 40,000 BTC held over 365 days, Bitwise requires:
Thus, they need 14.6 million BECs to offset the emissions associated with holding 40,000 BTC for an entire year.
Step 2: Acquiring and Retiring BECs
The ETF sources its BECs from miners verified under the BEC methodology, ensuring that the emissions data align with GHG Protocol standards. Each miner-specific BEC reflects a day’s worth of emissions per BTC based on the miner’s energy use and network contribution.
Certificate Verification: Each BEC is traceable to a specific miner and emissions factor, providing full transparency.
Registry Transparency: BECs are retired in a public registry, enabling stakeholders to verify the certificates and offset claims.
Step 3: Offsetting Emissions and Reporting for Stakeholders
Once retired, BECs are used in their end-of-year sustainability reporting as offsets against the emissions impact of its Bitcoin holdings. The transparency of the public registry provides their investors and stakeholders with an accessible means to verify the ETF’s environmental offset efforts.
5. Reporting Benefits: Accurate Scope 3 Emissions Reporting
Just as SAF offers a clear path for corporations to claim reductions in travel-related emissions, BECs provide Bitwise with an accurate and verifiable method to report Bitcoin holding emissions. By acquiring and retiring BECs, the ETF ensures its Scope 3 emissions reporting accurately reflects its commitment to sustainability.
Sustainability Report Highlights:
Total BTC Holdings: 40,000 BTC
Total Carbon Offsets: 14.6 million BECs retired, representing one year’s worth of emissions for 40,000 BTC.
Transparency and Verification: Each BEC is publicly verifiable in the registry, reinforcing the credibility of the ETF’s sustainability claims.
6. Outcomes and Benefits of BEC Use
Precise Scope 3 Emissions Accounting: BECs provide Bitwise with a supplier-specific emissions factor, offering greater accuracy than industry-average emissions factors and aligning with GHG Protocol requirements.
Demonstrated Environmental Responsibility: The use of BECs reflects the ETF’s commitment to mitigating the environmental impact of Bitcoin holdings, appealing to environmentally conscious investors.
Transparency for Investors: Through the BEC registry, the ETF’s stakeholders can verify the number and authenticity of retired certificates, ensuring trust in the ETF’s carbon offset claims.
Supporting Sustainable Mining: By purchasing BECs from certified miners, the ETF promotes the adoption of renewable energy in Bitcoin mining, further contributing to industry decarbonization.
Conclusion
For the Bitcoin ETF, the use of Bitcoin Emissions Certificates (BECs) parallels the role of Sustainable Aviation Fuel (SAF) in corporate travel emissions. Through the acquisition and retirement of 14.6 million BECs, the ETF achieves precise Scope 3 emissions reporting for its Bitcoin holdings, meeting the standards of the GHG Protocol and setting a strong example in responsible cryptocurrency investment management.
This approach aligns the ETF with corporate best practices for sustainability, enhancing transparency and accountability in environmental reporting, and strengthening the ETF’s reputation as an environmentally conscious investment firm.
Last updated