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Jan 4, 2023

Do ESG Investors Own Crypto?

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Nearly 3 in 5 ESG Investors Own Cryptocurrencies

Considering that crypto exists purely on the internet and in our digital wallets, it might not seem like a threat to our environment. We’re here to tell you that it most certainly is.

We’ve surveyed 1,011 American bond, crypto, NFT, real estate, and stock investors to get their views on the matter. Of them, 80% considered themselves “ESG investors” — those who base their investment decisions on environmental, social, and governance standards that ensure they’re socially and environmentally conscious.

We asked respondents about their investment decisions and tested their knowledge about cryptocurrency’s environmental impact. How many think crypto’s energy usage is harmless to the environment? What coins do most ESG investors hold? Can investors recognize eco-friendly coins from a list of cryptocurrencies? Read on to find out!

Key Takeaways

  • Only 36% of ESG investors believe crypto energy usage is bad for the environment.
  • 48% of crypto investors were unwilling to stop investing in crypto, even if it meant protecting the environment.
  • Only 44% of crypto investors know which coins are the most environmentally friendly.
  • Algorand, Ethereum, and Polkadot are the top green coins investors are buying.

Crypto and the Environment

To put crypto’s energy consumption in perspective, Bitcoin uses about 150 terawatt-hours of electricity annually; more than the entire country of Argentina, which has a population of 45 million. Consequently, 65 megatons of carbon dioxide are released into the atmosphere in one year, which is similar to that of Greece.

So, how much do investors know about crypto’s impact on the environment, and how do they feel about it?

Environmental concerns infographic
Environmental concerns infographic

Most crypto investors said they care a lot about the environment (53%), and of them, 82% considered themselves ESG investors. So, considering 87% of our respondents said they believe crypto’s energy usage is at least “somewhat” bad for the environment, you’d think many would be against it.

But evidently, there’s a bit of a disconnect between all this when it comes to crypto. Nearly three-quarters (71%) supported crypto’s energy consumption. More than half even believed crypto was good for the environment (52%). Even those who identified as ESG investors have some money tied up in crypto.

Top 10 coins owned infographic
Top 10 coins owned infographic

ESG and non-ESG investors held more Bitcoin than any other cryptocurrency, with 45% and 54% saying they owned some (respectively). As of November 21, 2022, a single Bitcoin was worth just shy of $16,000. Compared to its $700 value six years ago, this huge growth has made it the most expensive cryptocurrency on the market.

Some cryptocurrencies are considered “green coins” because they require lower energy usage and are more sustainable for the planet. Energy-efficient coins like these accounted for six of the top 10 coins owned by ESG investors compared to only four owned by non-ESG investors.

However, non-ESG investors’ second most-owned coin was Ethereum. This cryptocurrency has the second highest market cap of all (behind Bitcoin), and it’s also considered a green, energy-efficient coin. So, at least non-ESG investors are highly likely to invest in at least one of them.

How crypto mining works infographic
How crypto mining works infographic

Many investors own crypto without knowing where it comes from; 35% of crypto investors said they didn’t know how crypto mining works. It involves a network of specialized computers generating and releasing new currencies while verifying and securing the blockchain (a virtual ledger that tracks cryptocurrency transactions). Of the 65% who knew this, ESG investors were the most likely to say so (71%).

As we know, mining requires a massive amount of energy. Luckily, 80% of respondents said they were aware of that. Still, 57% were only somewhat aware of its effect on the environment. Even if they were fully aware of it, 48% of crypto investors wouldn’t stop buying it. Surprisingly, even 41% of ESG investors said the same.

Do you believe creating NFTs is bad for the environment? infographic
Do you believe creating NFTs is bad for the environment? infographic

Shifting to NFTs, 55% were under somewhat of an impression that creating them was bad for the environment. Similarly to cryptocurrencies, the NFT creation process can be highly energy intensive, but there are some energy-efficient NFTs, like those on the Ethereum, Solana, and Algorand blockchains. Still, 58% of NFT investors wouldn’t stop collecting them, even if they thought it would make an environmental difference.

Identifying Green Coins

Environmentally-conscious crypto investing is an option for those keen on minimizing their impact on the planet. But how many know which cryptos are green?

Greener alternatives infographic
Greener alternatives infographic

Crypto investors concerned about the environment may want to brush up on their sustainable crypto knowledge; 47% couldn’t identify any green coins from a list of 20 options. Only 44% could identify the most environmentally friendly coins, and ESG investors were 35% more likely to be able to than non-ESG investors.

Still, over 70% of respondents said they’d be interested in environmentally friendly cryptocurrencies. They could start with Algorand, IOTA, and Nano, as these were the top coins that crypto investors perceived as environmentally friendly and which actually were. Although Bitcoin made the top three for the cryptocurrencies our respondents most often guessed to be energy-efficient, it actually isn’t.

Invest Responsibly

As we’ve found, most crypto investors are aware that crypto is bad for the environment. Nonetheless, many supported its energy consumption and said they wouldn’t stop investing in it, even if it meant protecting the environment.

Maybe if they knew about all the sustainable coins available, they’d be more willing to change. Ethereum, for example, is the second biggest coin in the world and has reduced its electricity and carbon consumption by more than 99%. Investing in green, energy-efficient coins like this could make a considerable difference.

Methodology

For this campaign, we surveyed 1,011 Americans who invest in at least one of the following: bonds, cryptocurrencies, NFTs, real estate, and stocks. Among them, 80% considered themselves ESG investors, 10% didn’t, and 10% didn’t know what ESG meant. The investment type breakdown was as follows:

  • Bonds: 37%
  • Cryptocurrencies: 60%
  • NFTs: 26%
  • Real estate: 33%
  • Stocks: 65%

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