BlackRock & the ever evolving Bitcoin energy narrative

11 min readJul 12, 2023

Summary:

News outlets like the New York Times have repeatedly painted the Bitcoin mining industry in a negative light. But legacy media may also be biased in their reporting due to their ownership structures.
BlackRock, the world’s largest asset manager, has substantial stakes in mainstream media companies, including The New York Times.
BlackRock also has significant investments in Bitcoin mining companies like Marathon Digital Holdings and Riot Blockchain. They also gave a financial lifeline to Core Scientific.
Even with the shift towards renewables, BlackRock stated in their 2030 net zero report that they plan to invest long-term in fossil-fuels. They believe fossil-fuels are vital for the economy and the gradual transition to cleaner energy.
If BlackRock’s Bitcoin ETF gets approved, coupled with other institutions like ArkInvest, there might be a stronger push for renewable energy in Bitcoin mining. Marathon Digital Holdings has already pledged to become 100% carbon neutral. Core Scientific claims over 50% of its power is from non-carbon emitting sources and is purchasing credits to offset its carbon footprint. BlackRock has also shown support for decarbonizing the blockchain sector, via their investment in Energy Web Token.
As per a recent research report by JP Morgan, only miners with low power costs and high sustainable energy sources will thrive in the future.
Given this analysis, there’s a potential for a feedback loop: renewables gain financial value from Bitcoin mining and vice versa, with BlackRock playing a central role in this ecosystem. This could lead to a shift in the narrative where miners rely on large institutions like BlackRock for energy support and positive media sentiment to survive. If BlackRock’s Bitcoin ETF is approved, it might indirectly influence the media narrative on Bitcoin’s energy consumption, (to encourage stakeholders and investors) pushing for a more positive portrayal of the Bitcoin mining industry.
We’ve already seen public sentiments about Bitcoin change. In October 2017, BlackRock CEO Larry Fink referred to Bitcoin as an “index of money laundering.” In July 2023, Fink said crypto, specifically Bitcoin (BTC), could revolutionize the financial system.
While the change in media sentiment can likely be tracked as far back as May 2023, it is fascinating to see a theoretical idea become a reality in front of our eyes. Whether this is the beginning of a full BlackRock effect remains to be seen. But the future appears to be bright.

From the early days of proof-of-work, mining Bitcoin with CPUs and GPUs, to the recent mining with renewable and stranded energy sources, Bitcoin’s energy consumption has become an ever-growing point of contention among many kinds of people. The bigger the network, the more difficult the mining process, the more energy required; it means real-world use of fossil fuels, power grids and emissions.

Unhelpfully, the media has also contributed to negative perceptions, as exemplified by the New York Times, that attempt to make the Bitcoin mining industry look like an environmental disaster, rather than providing up-to-date, objective, unbiased journalism.

As detailed in an op-ed by an independent researcher, level39, one such example is the recent NYT article titled “The Real-World Costs Of The Digital Race For Bitcoin”, which targeted Bitcoin miners participating in approved demand-response programs within Texas’ ERCOT grid.

It’s eminently clear mainstream media firms owned by a small conglomerate of wealthy individuals such as Carlos Slim or companies (such as mainstream oil and gas), have vested interests. Not to mention the most influential media employees who share in these interests because their empire apologia has made them rich as well. One such example exposing the biased reporting of organisations like the New York Times is a book titled The Gray Lady Winked, which reveals an ongoing pattern of how the news media’s flagship outlet deliberately — even radically — alters history via misreporting, fabrications & distortions that date back over much of the 20th century.

The world’s largest asset manager, BlackRock, is not exempt from this picture, having recently increased its stake in the company, thereby acting as the second-largest investor of the NYT with 8.67% of class A shares.

Although it may be hard to quantify or correlate the influence of shareholders on ensuing media narratives, it’s not impossible. Yes, both BlackRock and The New York Times are separate entities with their distinct agendas, priorities, and editorial independence. However, media organizations can be influenced by a range of factors, including ownership, advertising revenue, and ideological inclinations. Needless to say, corporate ownership, like BlackRock’s ownership stakes in media conglomerates, may indirectly impact the overall media landscape. This influence can manifest in various ways, such as the allocation of resources, editorial policies, and the selection of perspectives covered.

Alongside the New York Times, “Vanguard and BlackRock are the top two owners of Time Warner, Comcast, Disney and News Corp, four of the six media companies that control more than 90% of the U.S. media landscape,” said Jeannette Copperman in a Common Reader article.

Together, BlackRock and Vanguard (the largest shareholder of BlackRock) own 18% of Fox, 16% of CBS, 13% of Comcast and the Sky media group (owners of NBC, MSNBC, CNBC), 12% of CNN, and 12% of Disney — which owns a number of subsidiaries.

Media behemoths that present themselves as rivals are, in reality, owned by the same company. As mentioned, the editorial authority of BlackRock in the companies in which it has a stake is debatable, but ultimately, it can direct narratives globally and influence geopolitics on the grandest of scales.

As it relates to Bitcoin, should an ETF be approved by the SEC, while only tracking the price movement of the asset, the access BlackRock will give their investors does make the evolving energy narrative all the more relevant and perhaps increasingly financially delicate, given their pre-existing investments with mining companies as well.

It’s time to dissect this complex relationship, assessing how BlackRock’s interests and investments in Bitcoin, media, and renewable energy might shape the evolving energy narrative as they will have more skin in the game. For full disclosure, this essay won’t make any overt presumptions, but rather provide a summation of BlackRock’s involvement in each sector and attempt to highlight the patterns that can be followed in due time.

BlackRock’s public involvement with Bitcoin mining companies

As reported by Forbes, a mandatory SEC filing dated June 30, 2021, revealed that BlackRock took significant stakes in two bitcoin miners, 6.71% in Marathon Digital Holdings and 6.61% in Riot Blockchain.

The total amount invested in the two companies (spread across various mutual funds and exchange-traded funds (ETFs) of BlackRock, such as its iShares Russell 2000 ETF) was just under $383 million ($382,962,003). The disclosure came after Fidelity Group revealed that it had taken similarly large stakes in the Bitcoin miners.

In 2022 BlackRock also gave bankrupt Bitcoin miner Core Scientific a $17M loan. According to a U.S. Securities and Exchange Commission filing, BlackRock, which is Core Scientific’s largest shareholder according to FactSet data, already held $37.9 million in secured convertible notes. The move came about by miners being squeezed by high energy costs and lower bitcoin (BTC) prices.

BlackRock & Energy

When it comes to the energy sector, and in response to claims about boycotting the energy industry by Texas Comptroller Glenn Hegar, BlackRock reported that as of June 30 2021, its investment in fossil fuel companies totalled $259 billion globally, of which $91 billion was invested in Texas-based fossil fuel companies, noting that it is “perhaps the world’s largest investor in fossil fuel companies.” BlackRock’s largest stake in a Texas energy company was $20 billion — 6.3% of the equity float — in Exxon Mobil Corp. Even with the shift towards renewables, BlackRock stated that they plan to invest long-term in fossil-fuels. They believe these high-carbon sectors are vital for the economy and the gradual energy transition.

https://www.reuters.com/markets/us/facing-texas-pushback-blackrock-says-it-backs-fossil-fuels-2022-02-17/

https://www.blackrock.com/us/individual/insights/sustainability-energy-investment-impact

By comparison, in 2021, the firm raised $4.8 billion for a new fund to invest in renewable assets around the world — almost double its initial target when they started raising money in the second half of 2019. Securing capital from over 100 institutional investors, and as reported by Bloomberg, BlackRock has already started investing the fund’s money, which includes an American solar company and a solar power developer in Taiwan. The company plans to invest mostly in wind and solar assets across Europe, the U.S. and some countries in the APAC region like Japan, South Korea, and Taiwan. BlackRock has already signed a deal linked to offshore wind in Asia.

While the company mostly bought construction-ready renewable power assets in the past, they are now diversifying to earlier-stage projects and also buying into developers. The fund will also look to invest in other related technologies like smart meters, smart power grids and infrastructure to support electric vehicles.

In addition to the 4.8 billion raise, its commitment to renewable energy was further amplified by a recent raise of AUD 500M to finance a 1.68 GWh Battery in Australia. The Waratah Super Battery (WSB), being built by BlackRock battery offshoot Akaysha Energy north of Sydney, is designed to unlock latent transfer capacity in the existing transmission system. It will help to integrate renewable energy and maintain grid reliability by acting as a “shock absorber” during power surges.

Side note on ESG

Despite these sizable investments in the renewable sector, the disavowal of the environmental, social, and corporate government standards (ESG) terminology by BlackRock’s CEO, Larry Fink, could signal a shift in how BlackRock measures and communicates its sustainability efforts.

Reference: BlackRock’s Fink Says He’s Stopped Using ‘Weaponised’ Term ESG

But acronyms aside, BlackRock has made a public commitment to a net-zero carbon economy by 2050.

Reference: Sustainability as BlackRock’s New Standard for Investing

To quote key sections (pages 16–17) of their annual report (2021):

“The global transition to a net zero economy will transform the way the world produces and uses energy, moves goods and people and constructs the built environment, which will in turn reshape the economy and financial portfolios.”
“The war in Ukraine — and subsequent energy supply shock — will slow the world’s progress toward net zero in the near term, but accelerate this transition in the long term as countries look for greater energy security and as higher energy prices make clean energy alternatives more economically competitive.”
“Achieving a net zero economy will take a significant investment in climate infrastructure: renewable power, energy-efficient buildings, electric transportation and more. The need — and opportunity — is especially great in emerging markets. We believe that the public, private and philanthropic sectors can work together to accelerate the flow of private capital into green projects in a way that contributes to the greater environmental and social good — and also allows for attractive risk-adjusted returns.”

Energy Resources and Bitcoin Mining

As such, to uphold carbon neutrality by 2050 and align with the overarching focus on renewable energy, BlackRock may also encourage or provide ways to incentivise Bitcoin miners to accelerate their transition to socially acceptable energy sources. While creating an ETF doesn’t mean the firm will hold any BTC, providing legitimate exposure to the asset alone could be enough to justify a more proactive stance, as mining operations have consolidated so much that now, only seven mining groups own nearly 80% of all computing power on the network.

However, such a direction to renewable energy may already be underway, as per the findings of the Bitcoin Mining Council, which said in 2021 that over 50% of the network ran on renewables. Although their methodology has been questioned, another study from Cambridge University found in 2020 that only 39% of the Bitcoin network ran on renewable energy. Overall global estimates of Bitcoin’s use of renewables range from about 40% to a whopping 75%.

Marathon Digital Holdings:

Out of the aforementioned companies that BlackRock is publicly supporting, Marathon Digital Holdings already announced its transition to new locations with more sustainable energy sources. The move was part of the company’s commitment to reach 100% carbon neutrality by the end of 2022.

Core Scientific:

Despite its vulnerability and ongoing struggles, according to Core Scientific, as of September 30, 2021, over 50% of the power used in their operations was generated from non-carbon emitting sources by local power providers pursuant to long-term power contracts. The company determines whether power is generated from non-emitting energy sources from dispatch reports or grid generation mix reports provided by Core Scientific’s power providers.

Based on these reports, Core Scientific purchased Green-e certified renewable energy credits (“RECs”) to offset 100% of the carbon produced due to its contracted power. The Company expects to maintain its net carbon neutrality by increasing its overall use of renewable power and by purchasing RECs when necessary.

Further examples

While not directly related to mining, other examples that signal BlackRock’s support for decarbonization in the blockchain sector is its investment in Energy Web Token which was mentioned in a 2022 press release. Energy Web is a nonprofit that builds operating systems for energy grids. “BlackRock is encouraged that organizations such as RMI and Energy Web are developing programs to bring greater transparency to sustainable energy usage in bitcoin mining, and will follow progress around those initiatives,” the release read, referring to RMI, an energy sustainability advocacy group.

The release detailed BackRock’s plans to create a spot bitcoin private trust for U.S. institutional investors before praising Energy Web’s potential to introduce less environmentally damaging bitcoin mining strategies. The press release follows a recent announcement that BlackRock, the world’s largest asset manager, has established a partnership with crypto exchange Coinbase Global (COIN) to offer cryptocurrencies to BlackRock’s institutional investors.

Future Implications

Given ArkInvest also filing for a Bitcoin ETF, their focus, coupled with BlackRock, could lead to a greater push for cleaner or stranded energy resources. In either case, as per a recent research report by JP Morgan, it seems like only miners with low power costs and high sustainable energy will survive. The report highlights that electricity is the main cost in mining, impacting the overall cost of bitcoin production; as such, miners have been actively seeking cheaper, sustainable energy sources.

JP Morgan says that over time the Bitcoin mining industry will both consolidate and become more competitive as only miners with lower production costs will be able to survive; miners are diversifying their power mix with renewable sources to become more environmentally friendly, the report said. Falling electricity prices, combined with a focus on sustainable energy sources, can help miners maintain their operations amidst increasing competition and evolving hashrate dynamics.

While it may be difficult to say how it’ll translate for rhetoric in outlets like the New York Times, perhaps as more miners support renewable energy sources that BlackRock has an interest in and provide a circular ecosystem whereby renewables gain financial value from Bitcoin mining and vice versa, with BlackRock at the centre, the narrative will shift, meaning more miners may become reliant on the support and resources of big institutions like BlackRock both in energy and positive media sentiment.

Overall, despite it being difficult to ascertain when BlackRock will directly influence media rhetoric should an ETF be approved. But based on the information above, the prospective ETF, at the very least, contributes to the ongoing discussions surrounding the energy narrative of Bitcoin in legacy media. As media narratives adapt to these changing dynamics, we can expect discussions to expand, exploring the possibilities and challenges associated with greener energy solutions in crypto mining. And, if nothing else, it is reasonable to anticipate that BlackRock’s increasing involvement in digital assets, as indicated in their 2022 annual report (page 19), will lead to further engagement with this critical topic.

Post-Script: A Thesis In Motion

In terms of when BlackRock would move the needle on shifting the mainstream narrative on, it turns out they began doing so while this article was being researched and written. While the change can likely be tracked as far back as May 2023, it is fascinating to see a theoretical idea become a reality in front of our eyes.

Whether this is the beginning of a full BlackRock effect remains to be seen. But the future appears to be bright.