[ad_1]
You can’t say “Mr. Wonderful” didn’t warn you.
Shark Tank host Kevin OLeary was among the first in the investment community to sound the alarm on bitcoin sustainability issues, when he pointed out in an interview with Yahoo Finance in early May. Two weeks later, Elon Musk announced that Tesla was reversing its stance on accepting crypto as a form of payment, citing the same sustainability issues, causing the bitcoin price to collapse by 35% for the month.
But now, speaking with Yahoo Finance at the 2021 Bitcoin conference in Miami this weekend, OLeary said what was bitcoin’s biggest problem has become its biggest opportunity, predicting that a shift from bitcoin miners to More sustainable forms of energy could propel bitcoin to outperform stocks widely over the next decade if it manages to solve its sustainability problem to attract institutional investors again.
“This is both a huge problem and a huge opportunity, I prefer to look at the opportunity,” said O’Leary. “I called him during that interview with Yahoo Finance, and the proverbial poo hit the fan. I took a lot of criticism, but it’s obviously on the mind of the institutional client.”
As O’Leary argues, the perspective of a fraction of the miners using non-renewable energy, such as some of the Chinese miners still running on coal-fired electricity, has prevented a number of institutional investors from investing in bitcoin because of fears about ESG, or environmental, social and corporate governance, compliance. Despite the fact that a 2020 Cambridge University study ranked sustainable miners at around 40% of the bitcoin network and is climbing, the stigma attached to other miners contributing to carbon emissions and global warming remains an issue. ESG overhang.
“At the end of the day, there’s a new sheriff in town, he’s called ESG. Every institution, including from Larry Fink to BlackRock who released their ESG letter, their sustainability mandate, it was marginal, it’s not You have to be sustainable in terms of how you plan to invest, otherwise you will lose your investor, ”he said.
The story continues
Shark Tank’s Kevin O’Leary speaks with Yahoo Finance at the Bitcoin 2021 conference in Miami.
As such, O’Leary has made deals with miners who use sustainable forms of electricity, like large miners at Texas-based wind farms, to secure payment in bitcoin that he can prove was sustainably extracted. Other bitcoin advocates have suggested matching bitcoin held in wallets with carbon credits to offset any potential ESG conflict.
“I just think the minute we solve the institutional ESG problem, Katy is shutting down the doors. Because people don’t understand that the majority of global investment is in institutions and sovereign wealth funds. find the real money, ”he said.
Galaxy Digital CEO Mike Novogratz echoed this sentiment in an interview with Yahoo Finance at the Bitcoin 2021 conference, noting that institutional players largely helped bitcoin reach new heights earlier this year.
As an example of the importance of bitcoin, O’Leary said the same ESG overhang has put negative pressure on oil companies. Highlighting the declining price-to-earnings ratios in the space, he says institutional pressure to divest has driven down the price of oil stocks despite an increase in cash flow.
“It’s the sustainability committees that get stocks out of the portfolios mandates… that just gives you an idea of how powerful the ESG mandate is,” he said. “We have to solve for the institutional client. They want to invest in bitcoin. They can’t right now, it’s a really strange situation. “
O’Leary remains optimistic, however, that institutional investors will find a way to be creative in making the stance work the way he did and believes that once this hurdle is overcome, bitcoin would be off the hook. return to continue to outperform stocks over the next decade. .
“I think we are going to fix the bitcoin ESG issue in the next 12-18 months and I think in the next 10 years the bitcoin asset itself will beat the S&P. [500]. So if you think of an average of 7-8% over a decade on the S&P, I think bitcoin would be 300-400 basis points higher, I really mean it, ”he said.
The call seems cautious of bitcoin’s historic outperformance against the stock market. Bitcoin’s annualized return over the past decade has averaged 230%, more than 10 times higher than the ETF that tracks the Nasdaq (QQQ) and over 16 times the ETF that tracks the S&P 500 (SPY), which averaged 20% and 14% annualized returns over the same period, respectively.
Zack Guzman is a presenter for Yahoo Finance Live as well as a senior writer covering entrepreneurship, crypto, cannabis, startups and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.
Read the latest cryptocurrency and bitcoin news from Yahoo Finance
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube and reddit.
Find live stock quotes and the latest business and financial news
For tutorials and information on investing and trading stocks, check out Cashay
[ad_2]
picture credit