The ESG dropping Tesla is the most infuriating thing I've read in a while, and I've read lots of infuriating things. See Pomp's newsletter:
CFTC Chairman Rostin Behnam attended the POLITICO’s Sustainability Summit yesterday and was asked about bitcoin mining, proof-of-work, and energy consumption. As you would expect at an environmental conference, Behnam spoke out aggressively against bitcoin mining.
He
specifically stated there was a “
...clear dislocation between the usage and generation that’s needed to mine these coins and the sort of economic output that we’re seeing from digital assets themselves. That may rebalance over time, but right now it’s clearly skewed.”
It seems weird that a leading financial regulator is talking about energy consumption as a framework to evaluate a financial asset, especially when you remind yourself
what the CFTC is tasked with doing:
“The Commodity Futures Trading Commission protects the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to fosters open, competitive, and financially sound futures and option markets. They investigate and prosecute commodities fraud, including foreign currency schemes, energy manipulation and hedge fund fraud, and works with other federal and state agencies to bring criminal and other actions.”
Now this concern from the climate, whether real or virtue signaling, did not appear out of the blue. Last year the CFTC and Chairman Behnam set up a Climate Risk Unit, which they described in a
press release:
“Commodity Futures Trading Commission Acting Chairman Rostin Behnam today announced he has established the Climate Risk Unit (CRU) to support the agency’s mission by focusing on the role of derivatives in understanding, pricing, and addressing climate-related risk and transitioning to a low-carbon economy. Comprised of staff from across the CFTC’s operating divisions and offices, the CRU represents the agency’s next step in response to what has become a global call to action on tackling climate change. The CRU is intended to accelerate early CFTC engagement in support of industry-led and market-driven processes in the climate—and the larger ESG—space critical to ensuring that new products and markets fairly facilitate hedging, price discovery, market transparency, and capital allocation.”
The CFTC is embracing the ESG movement. That sounds like a good thing, right? Well…there is mounting evidence that the entire ESG argument is simply virtue signaling. Let’s take a look at the most recent example — Tesla, the company responsible for ushering in an electric vehicle bonanza, was
removed from the S&P ESG Index yesterday.
You can’t make this stuff up.
Tesla CEO Elon Musk was obviously not going to sit around and allow the irony to pass without commenting. Yesterday morning the world’s richest man began to attack the ESG movement in an attempt to expose the hypocrisy.
Elon Musk @elonmusk
Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors.
May 18th 2022
39,547 Retweets275,196 Likes
Elon Musk @elonmusk
.@SPGlobalRatings has lost their integrity
May 18th 2022
6,841 Retweets91,332 Likes
This seem like fair critiques of an organization that has apparently lost the plot. But to really ratchet up the conversation, Elon resorted to memes as well. Why? The meme is the message.
Pretty funny meme.
It is important to call out that everyone in the environmental or ESG movement is not a bad actor. Many, if not most, are trying to improve the way that we interact with the environment and they generally have good intentions. The problem is that a loud minority has essentially hijacked the movement and turned it into a weapon across markets.
This brings me to my main point — energy consumption is at the core of everything we do. It is literally how we produce things.
Bitcoin mining is estimated to have a sustainable energy mix of
58.8% globally, which makes it one of the most sustainable industries in the world. In comparison, the US economy is only at
approximately 12%.
Rather than celebrate bitcoin mining’s ability to leverage renewable power and put it on the pedestal as an example for other industry’s to replicate, we have financial regulators attacking the industry in an effort to appeal to environmentalists who believe Exxon is more environmentally friendly than Tesla.
That tells you everything you need to know about this debate. As my friend Jason Williams recently said in
an interview, “
When we have solar-powered tanks I’ll be happy to opine on this but until then, stop moralizing power.”
