It’s been a rollercoaster of a ride for Bitcoin investors in the last couple of months, but that will come as no surprise to savvy investors who will already know that investing in Bitcoin requires nerves of steel.
However, no one could have predicted the fall from its record of $63k in mid April to just 40k this morning, and that’s following a recovery from $30k in the last 24 hours. Bitcoin wasn’t the only Crypto currency to fall in value, with Ethereum, Doge, and Litecoin all dropping more than 40% at their lowest point.
Whilst Bitcoin is notorious for being more volatile than other assets, this latest crash is considered one of the most severe price crashes in the currency’s history. An article in the Financial Times highlighting the currency’s environmental impact showed that Bitcoin is consuming the same amount of electricity as Sweden.
Bitcoin’s image as a ‘dirty currency’ was enough to prompt Elon Musk to reverse plans to accept Bitcoin as payment for Tesla vehicles, however, his statement last night that Tesla would not be selling its substantial Bitcoin holdings has helped stabilise the currency overnight following the announcement that China has banned all financial institutions from providing services relating to cryptocurrency transactions.
During 2020, Bitcoin increased over 300% in value, however, how the currency can be aligned with environmental, social and governance (ESG) investing seems to be a hot topic as more and more investors move towards socially responsible portfolios.
Concerns over climate change have prompted a surge in interest in ESG investing and now everyone is aware of the impact that validating transactions (known as ‘mining’) has on the environment. Whilst Bitcoin have argued that they are using mostly renewable energy, the truth is that a vast proportion of mining relies on burning coal which in turn produces as much carbon dioxide as New Zealand.