Why Ethereum could see a huge influx of funds from institutional ESG investors


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Of Ethereum‘s transition to proof-of-stake (posNow behind us, more people are pointing out the environmental benefits of the network, saying that ESG-focused investors will flock to ETH once they learn more about it.

Following Ethereum’s transition from proof-of-work to proof-of-stake – an event known as the merge – the network will use 99.95% less energy than before, according to the Ethereum Foundation. In addition, Ethereum co-founder Vitalik Buterin also has retweeted a claim on Thursday stating that “the merger will reduce global electricity consumption by 0.2%.”

Bitcoinby comparison, continues to rely on the much more energy-intensive proof-of-work system as its consensus mechanism.

Not surprisingly, the promise of significantly lower energy consumption by Ethereum is attractive to ESG investors, who are interested in reducing energy consumption and – in particular – CO2 emissions.

According to Conor Svensson, CEO and founder of Web3 Labs, the move to proof-of-stake for Ethereum could make even Bitcoin and other networks that remain on proof-of-work less attractive to these investors.

“If you’re a company looking to invest in cryptocurrencies, I can imagine that given the ESG story, a lot of them will be a little reluctant to get exposure to Bitcoin if there’s another asset that doesn’t consume massive amounts of power. said Svenson. quoted in a recent Evening Standard article as saying, while also noting:

“I do believe that Ethereum will overtake Bitcoin in the long run.”

ESG stands for Environmental, Social and Governance and so-called ESG investing has become extremely popular in recent years with both private investors and financial institutions. According to a Bloomberg report In terms of ESG investments, the assets under management of ESG funds will reach $41 trillion by the end of 2022, with ESG-related assets now accounting for one in every three dollars managed globally.

Source: Bloomberg

ETH is the world’s second most valuable crypto asset with a market cap at the time of writing of just over $173 billion. And while some believe that ETH will one day overtake BTC as the most valuable cryptoasset, an event dubbed “the flippening,” ETH’s market cap still remains less than half that of BTC.

ETH fell in price immediately after the merger, falling 4.2% over the past 24 hours to a price of $1,435 on Friday at 9:50 PM UTC.

ETH price last 30 days. Source: CoinGecko

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