Elon Musk has found a new critic. ARK investment management founder Cathie Wood thinks Elon Musk and ESG movement for the recent crypto crash. She spoke on Thursday at CoinDesk’s consensus 2021 conference and said “a lot of institutional buying went on pause”, she further went on saying that “It was precipitated by the ESG movement and this notion, which was exacerbated by Elon Musk, that there are some real environmental problems with the mining of bitcoin.”
ESG factors refer to environmental, social, and corporate governance, the central factors that are crucial in measuring the sustainability and societal impact of an investment in a company or business. A recent study published in the Nature magazine had sparked many debates about the energy consumption of Bitcoin. It claimed most energy used in China is used coal-powered and could also challenge the country’s commitment to the Paris agreement. Crypto bulls had challenged many of these findings.
This final nail in the coffin for the fall was put by Elon Musk who banned Tesla that was the first automobile company to accept payments in Bitcoin from accepting Bitcoin. He cited the reasons for environmental concerns behind the ban. Bitcoin and all other cryptocurrencies took a huge hit as soon as the announcement was made from his Twitter account. Bitcoin lost almost 50% of its value from recent peaks.
Wood’s statements shed light on investors becoming aware of social responsibility. Investors today want to invest in assets that have a low social impact. Some investors are highly sensitive to the issue.