BlackRock Launches Bitcoin Private Trust for Institutional Players

BlackRock – the world’s largest asset manager – has launched a Bitcoin private trust offering clients direct Bitcoin exposure. This will give U.S. institutional customers exposure to Bitcoin’s price, less the trust’s expenses and liabilities. 

BlackRock’s Clients Want Bitcoin

On Thursday, BlackRock stated that its clients have shown “substantial interest” in gaining cost-effective crypto exposure through its platform. Bitcoin, it said, is a particular eye-catcher:

“Bitcoin is the oldest, largest, and most liquid crypto asset, and is currently the primary subject of interest from our clients within the crypto asset space,” stated the firm.  

Since its creation, Bitcoin has always been the largest digital asset by market cap. The asset accounts for about 40.5% of the total crypto market cap – and over 50% when excluding fiat-backed stablecoins.

BlackRock is still working in these other areas of the industry, including stablecoins, permissioned blockchains, crypto assets, and tokenization. It believes that offering services in these areas can benefit its clients alongside broader capital markets. 

The company’s announcement shortly follows the reveal of its partnership with Coinbase last week. Coinbase said at the time that clients of Aladdin – BlackRock’s investment management platform – would gain access to crypto exposure through Coinbase Prime, “starting with Bitcoin.”

BlackRock held $8.5 trillion in assets under management as of Q2 2022, surpassing even Fidelity at $4.3 trillion as of Q1 2022. 

The latter has offered digital asset services for years, and announced the inclusion of Bitcoin in 401(k) retirement accounts in April. Its also singled out Bitcoin as unique from all other digital assets. 

BlackRock, Bitcoin, and Environmentalism

In Thursday’s statement, BlackRock added that it is following progress around initiatives that “bring  greater transparency to sustainable energy usage in bitcoin mining.” This includes Rocky Mountain Institute (RMI) and Energy Web’s certificate initiative to  “assess the ‘green’ credentials of bitcoin miners.”

Environmental concerns are prevalent among investors. An Ernst and Young survey in November showed that 74% of institutional investors would divest from companies with poor ESG performance. 

Cathie Wood – CEO of Ark Invest – believed that Bitcoin’s 50% crash in May of 2021 was sparked by ESG concerns. The selloff occurred soon after Tesla announced that it would cease accepting Bitcoin payments due to mining’s carbon footprint. 

Speaking at CoinDesk’s Consensus 2021 conference, she even speculated that Musk had received concerned calls from BlackRock boss Larry Fink. The boss is famous for focusing on ESG, and is one of Tesla’s largest shareholders. 

However, a recent survey from the Bitcoin Mining Council found that 59.5% of Bitcoin miners are powered by sustainable energy. This green mix grew by 6% from Q2 2021 to Q2 2022, per the survey’s previous results. 

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Bitcoin’s upper bound annual energy consumption currently stands at 185.32 TWh of electricity. MicroStrategy Executive Chairman Michael Saylor noted in July that more energy is still consumed each year by holiday lights and computer games. 

“Even more importantly, whereas Bitcoin mining efficiency is escalating every year by dramatic amounts, the efficiency with which these other industries use energy is pretty static.,” he continued. 

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