2021 has seen record cryptocurrency adoption among retail and institutional investors: Robinhood Crypto onboarded 6 million customers in the first two months of 2021, and eToro hosted 61% more unique Bitcoin holders in January year-on-year. But as cryptos go mainstream, their increasing carbon footprint has led to growing environmental concerns. Just last week, Elon Musk announced Tesla would suspend Bitcoin payments and later implied the electric car firm may sell its $1.5 billion worth of Bitcoin holdings.
The most popular cryptos have a significant environmental impact that clashes with investor demand for sustainability.
Fintechs should add trading options for less energy-intensive cryptos to keep leveraging the sector’s user acquisition opportunities while alleviating environmental concerns. Green investing options are key to fintechs securing their growth momentum, per Insider Intelligence expectations, but getting rid of crypto trading would rob them of significant investor activity. Demand for the likes of Bitcoin and Ether is unlikely to crash simply because of environmental concerns, but fintechs should add access to other cryptos with smaller carbon footprints to attract environmentally-minded customers. Cardano, for example, uses the less energy-intensive “proof of stake” verification protocol and was recently added by Revolut. In addition, firms like Tesla may one day pick Cardano or other green cryptos as more sustainable alternatives to Bitcoin, enhancing their recognition among investors.