Five questions to Julius van Sambeck, managing director of Ethius Invest, Swiss member of SfC.
Julius, why did you decide to engage Intel on crypto-mining?
Within the scope of the current Crypto-Investment Boom, the most overlooked companies in the space (from a sustainability point of view) are those delivering the “shovels” and providing for the engine – in this case the semiconductor companies.
In close resemblance to previous booms in the banking sector, the semiconductor companies act highly amoral with respect to the footprint that is being created with the utilisation of their product in the space, i.e. the chips used for the mining of cryptocurrency.
Why can’t crypto-mining be considered as sustainable?
The current Proof-of-Work principle is designed to waste most of the resources used in the process of solving the mathematical equation powering any protocol. For example, as the price of Bitcoin rises, the negative externalities associated with Bitcoin mining increase in kind. The energy consumed by the network is mainly sourced from (stranded) fossil fuels, resulting in significant carbon emissions.
It remains to be seen if another method, namely the “Proof-of-Stake” mechanism will be able to improve the energy and electronic waste footprint of the blockchain technology.
Are you engaging other companies on the same issue?
Yes, but we prefer not to disclose their names publicly at this point in time. Besides that we are also following a multi-stakeholder approach and begun engaging the national sustainable finance boards to suggest and discuss new exclusionary criteria for investments that are considered to be named sustainable and most importantly to offer a transfer of knowledge to like-minded investors, as every year the exercise of voting rights at the AGMs of large corporations is helping to shape our world of tomorrow.
What could companies do to improve their ESG record in this market? Are there viable, and more sustainable alternatives?
Semiconductor companies could implement several company policies to manage and lower their exposure to the crypto-mining sector. That could include a disclosure for detailed information about the individual mining/chip equipment produced by the semiconductor company and a subsequent hard revenue threshold.
How is the engagement with Intel and other companies in the same sector progressing? What could be your next steps?
It is not going too well right now. We just learned yesterday that Intel prefers not to currently speak with us any longer on the subject, although they previously promised an in-depth discussion with their custom compute group on the subject. We will now ask ESG rating agencies to speed up their evaluation and provide guidance if they see a maximum allowed revenue threshold in the Crypto-Space before downgrading any company within their overall rating methodology. The good news is that the SEC is beginning to force US-based semiconductor companies to at least disclose their revenue in the space.