Bitcoin is facing huge sell-offs resulting in its worst weekly plunge in almost a year. The perspective on the cryptocurrency’s long-term valuation is further creating doubt among investors amid the growing ESG and regulatory concerns. For instance, the BCA research said that Bitcoin’s long-term value might loser over time due to the intensive energy needed to mine the cryptocurrency and the government’s efforts to curb the cryptocurrency globally.
Bitcoin at Clash with ESG and Regulatory Values
Bitcoin transactions might come as an unsuitable medium of exchange due to the expenses and slowness associated with it, according to BCA Research Chief Global Strategist Peter Berezin.
Besides, environmental, social, and governance-focused funds will likely companies associated with the cryptocurrency due to the energy-intensive methods to mine the cryptocurrency. Berezin added to his point:
“Many companies have cozied up to Bitcoin in order to associate themselves with the digital currency’s technological mystique. As ESG funds start to flee Bitcoin, its price will begin a downward spiral. Stay away.”
As per the BCA researchers, governments could also create regulatory hurdles as they could lose billions of dollars in revenue from seigniorage, i.e. the difference between the face value of money and the cost to produce it.
Currently, investment management industries are given priorities to improve upon the environment, dealing with social concerns, and improving corporate governance (ESG).
Hence, Bitcoin’s energy clashes with the environmental, social, and governance model of investing, which is becoming increasingly important in the financial world.
Bitcoin Still Up More than 5 Times Over the Past Year
As the price of bitcoin has soared in recent months, a number of investors did raise questions over bitcoin’s energy consumption. Others contradict that bitcoin increasingly uses renewable energy and will do so more in the future.
Despite the doubts, Bitcoin is still up more than five times over the past year, a contradictory claim among the naysayers who still see it as a speculative bubble.