Navigating the Ripple Effect: SEC's Bitcoin ETF Approval Shakes Crypto Stocks
The recent green light from the U.S. Securities and Exchange Commission (SEC) for a Bitcoin spot exchange-traded fund (ETF) has triggered a seismic shift in the crypto landscape. While this marks a significant milestone for investors and asset managers, the ripple effect has sent shockwaves through Bitcoin-related stocks.
Market Turbulence for Bitcoin Stocks
Following the ETF approval, Coinbase witnessed a 7.35% dip to $130.78, marking a 13.5% decrease since the Bitcoin spot ETF launch. Marathon Digital Holdings and Riot Platforms also faced downturns of 15.27% and 10.39%, respectively, on the same day. Even established Bitcoin investment firm MicroStrategy saw a decline of 9.45%.
Experts emphasize that investing in crypto-related stocks hinges on timing. While the launch of the Bitcoin spot ETF temporarily impacted individual stocks, it is considered a short-term challenge. Compared to bitcoin or bitcoin futures ETFs, bitcoin spot ETFs provide a simpler and more accessible entry into the crypto market.
Navigating Fees and Future Outlook
Major Bitcoin spot ETFs, recently authorized by the SEC, boast annual fees ranging from 0.24% to 0.30%. In contrast, Coinbase charges a higher fee of up to 0.6% per year for Bitcoin investments. Despite short-term market fluctuations, experts anticipate long-term benefits stemming from the overall growth of the bitcoin market and related stocks.
CNBC draws parallels between the approval of a bitcoin ETF and the approval of a gold ETF in 2004. The gold market's capitalization surged from $1-2 trillion to $16 trillion within a few years of ETF approval.
Environmental Impact of Bitcoin Mining
In a separate development, Professor Kabe Madani and the Institute for Water, Environment, and Health (UNU-INWEH) shed light on the environmental repercussions of Bitcoin mining globally. Their study reveals that the global Bitcoin mining network consumed 173.42 terawatt-hours of electricity in 2020-2021, ranking 27th globally and surpassing the electricity consumption of countries like Pakistan.
Fossil fuels, primarily coal (45%) and natural gas (21%), dominated the energy supply to Bitcoin mining, contributing to a significant carbon footprint equivalent to burning 38.14 million tons of coal. The study suggests planting 3.9 billion trees, occupying land areas comparable to the Netherlands, Switzerland, and Denmark, to offset this carbon footprint.
The water footprint of Bitcoin mining equates to filling 660,000 Olympic-sized swimming pools, and its land footprint is 1.4 times the size of Los Angeles. China, the U.S., Kazakhstan, and Russia lead in Bitcoin mining activity, with concerns raised about the environmental injustice and inequality in the unregulated digital currency sector.
The Call for Environmental Responsibility
The research team advocates for heightened scrutiny and government intervention to monitor and mitigate the environmental impact of cryptocurrency mining. They emphasize the need for investment in alternative digital currencies that are more energy-efficient and environmentally friendly.
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