Bitcoin greenwashing? Lawmakers want clearer definitions of green energy

Legislators in the United Kingdom have asked for greater regulatory powers to combat the rise of financial “greenwashing” — a deceptive practice where a company overstates or fabricates the extent of its green energy usage.

A report by the House of Commons cross-party Treasury Committee urges the U.K. government to sharpen its definition of environmentally conscious investments and to consult on the prospect of attaching “green labels” to financial products. The report notes that “green” claims attached to financial investments are often exaggerated, and can fail to align with customer expectations:

“It is clear that in some cases the labels or descriptions of ‘green’ or ‘climate-related’ indices do not necessarily match legitimate consumer expectations of what they would commonly be understood to mean.”

The rallying call by legislators came on the same day that Twitter CEO Jack Dorsey and Tesla CEO Elon Musk agreed on Bitcoin’s (BTC) potential to go completely green and to subvert its image as an environmentally damaging technology.

Musk and Dorsey were reacting to a new report by Square (of which the latter is CEO) and Ark Invest, which explored Bitcoin’s potential to contribute a boon to green energy usage. Titled “Bitcoin is Key to an Abundant, Clean Energy Future,” the report argued that, in combination with renewable energy storage, Bitcoin’s energy-hungry nature could present a solution to the problem that sees renewable energy often wasted in times of abundance.

The desire by investors to associate only with environmentally conscious businesses has led to the rise of ESG investing, which views environmental, social and corporate governance factors as key considerations when making sustainable investments.

CEO of U.K.-traded Bitcoin mining firm Argo Blockchain, Peter Wall, told Cointelegraph that he had witnessed an increase in ESG chatter in the mining space over the last few months. However, Wall noted that not all of it seemed genuine:

“There certainly has been lots of ESG talk in the crypto mining space in the last few months, which is great and moving things in the right direction. However, talk without action isn’t good enough, and can lead to cynicism.”

Argo is a Bitcoin mining firm that utilizes renewable energy in the form of hydroelectric power at its various mining farms located in Canada. The firm’s share price currently stands 4,000% higher than this time last year, and it recently purchased a 320-acre plot of land in Texas to expand its mining operations into the United States.

Wall agreed with the recent calls by U.K. legislators to force companies to back up their green energy usage claims:

“We think a key step in preventing greenwashing is ensuring that companies are able to back up the claims they are making, and prove they are making a genuine effort to have a positive impact on the environment, and we’re doing this.”

Wall said demand by environmentally conscious investors could naturally accelerate the process which sees clearer definitions applied to green labeling.

“Limiting the impact of climate change is critically important, and so ensuring companies are doing whatever they can to reduce greenhouse emissions and their environmental footprint is essential. Investor demand can help drive this, and clear guidelines are necessary to enable companies to invest in cleaner technologies,” said Wall.

Not everyone agreed that Bitcoin’s future prospects were as green as they seemed. As reported by the BBC, Bitcoin critic and author David Gerard referred to the Square/Ark paper as a “cynical exercise in Bitcoin greenwashing.”

“The reality is: bitcoin runs on coal,” Gerard told the BBC, referencing the recent coal mine accident in Xinjiang, China, which temporarily wreaked havoc on Bitcoin miners’ ability to produce new coins.

Bitcoin’s reliance on fossil fuels from China is inarguable, however, when compared to the resource consumption of the current fiat system, its effect on the environment seems much less scandalous.