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Shark Tank Investor Kevin O’Leary says that environmental concerns over crypto mining are sparking a flow of capital into a new section of the digital asset industry.
In a new Q&A session on his YouTube channel, the celebrity investor says that some mining companies have begun buying carbon credits, but that this practice won’t be viable in the long run.
“As the pressure came on for ESG [environmental, social and governance] mandates, they started buying carbon credits. That’s not going to work because you’re going to start to see in this year, I’m speculating, that these large institutions are going to start demanding carbon credit audits, and you don’t want to be in a company stock that has the risk of a carbon audit because the truth is it’s almost virtually impossible to show and understand the tracking error of a carbon credit versus what you’re actually burning in carbon.”
O’Leary says that investors are instead opting to invest in mining firms that tap on green energy sources. He says the investment strategy mitigates the risk of getting slapped with a carbon audit from regulators.
“So all of the money is quietly moving right now to new mining companies, most of them private, that are going to use hydro, wind, solar and nuclear power because if you use any of those options for mining, there is no carbon audit. There is no offset necessary. You’re not burning carbon.”
O’Leary says that he has invested in a mining facility in Norway which he says institutions are backing largely because of efficient use of green energy.
According to the Shark Tank star, institutional investors love the fact that by owning parts of these companies, they also indirectly hold coins that they know were ethically mined.
“We have power at less than two cents a kilowatt-hour. Our stacks are remote. We’re using the heat that’s generated there for hydroponics and fish rookeries, and the stakeholders of that mine are many of the villagers that live there.
Here’s the key to this situation: the institutions that are backing it and some of them are sovereign wealth funds ask me one thing: ‘Are the coins awarded going to stay on the balance sheet of this company? Because we’ll be able to own the stock with the proxy that we know every coin was mined sustainably under an ESG mandate, and that’s how we want to own our Bitcoin. If you’re telling us you’re going to sell off your coin, then we’re not investing.’”