The $10 trillion asset manager made headlines earlier this month when BlackRock partnered with Coinbase to offer bitcoin services to institutional investors.
Shortly after the announced partnership, the world’s largest asset manager announced that it launched a spot bitcoin private trust.
The statement issued by BlackRock mentions:
“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.”
Despite some statements and rumors on Twitter that BlackRock, due to Larry Fink’s association with ESG narratives and criticism of Bitcoin’s energy consumption, it appears that BlackRock is acknowledging that bitcoin is the main asset institutions are interested in.
The statement by BlackRock further reads:
“Bitcoin is the oldest, largest, and most liquid cryptoasset, and is currently the primary subject of interest from our clients within the cryptoasset space. Excluding stablecoins, bitcoin maintains close to 50 percent of the industry’s market capitalization”.
The institutional bitcoin trust is the first of its kind in the industry. While investors won’t be able to transfer bitcoin holdings from the trust into self-custody, the trust is based on bitcoin’s spot price. The trust is currently only available to U.S. institutional clients.
The request for a spot bitcoin ETF has repeatedly been declined by the SEC.
A spot bitcoin ETF would open up bitcoin exposure to a much broader segment of investors that are comfortable investing in more traditional vehicles using the stock brokerages they’re already accustomed to.
Although holding bitcoin in self-custody and purchasing bitcoin on an exchange isn’t that difficult these days, many investors might still not be comfortable with the idea, which is where BlackRock’s bitcoin trust or a spot ETF come in.
In terms of sustainability, BlackRock mentioned that the asset manager is encouraged by programs put forward by RMI and Energy Web to bring transparency to bitcoin’s energy usage and sustainability.
End of last month, Cathy Wood and ARKInvest made the case for using vented methane to mine bitcoin and how this would significantly lower the energy costs to mine bitcoin.
The use of stranded energy and ability to reduce methane emissions could turn around the narrative surrounding bitcoin’s role in sustainable energy usage.
As of now, BlackRock seems to respond to the demand expressed by institutional clients, which despite the current bear market and environmental concerns, are still interested in bitcoin.
