James Cirrone

Professional services firm KPMG is out with a new report that strikes a surprisingly friendly tone toward bitcoin and its impact on the environment.&nbsp;&nbsp;



The Big Four accounting firm’s ultimate conclusion was that Bitcoin “appears to provide a number of benefits across an ESG framework” through stabilizing energy grids, reducing greenhouse gas emissions and providing sustainable heat for commercial and residential properties.



ESG, or environmental, social and governance, is a metric that defines how companies and their activities impact the world. Some investors may look at corporations’ ESG scores to screen out stocks that don’t meet their standards of social responsibility.&nbsp;



The report’s authors point out that despite the network using a considerable amount of energy, Bitcoin doesn’t expel direct carbon emissions. It does, however, run on electricity, the cost of which is always at the top of mind for individuals or companies mining bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), KPMG claimed in the <a href="https://advisory.kpmg.us/content/dam/advisory/en/pdfs/2023/bitcoins-role-esg-imperative.pdf">report</a>.



Therefore, miners are “constantly searching for the lowest cost sources of electricity, which is often tied to under-utilized hydro, wind or solar,” KPMG wrote.



This statement bears out among even the biggest mining companies.



Blockworks reported in July that <a href="https://blockworks.co/news/bitfarms-doubles-down-on-paraguay">Bitfarms is using hydroelectric power from dams to juice its rigs in Paraguay</a>. Likewise, Back in 2021, Blockstream partnered with Jack Dorsey’s Square <a href="https://blockworks.co/news/blockstream-and-block-enlist-tesla-break-ground-on-bitcoin-mine">to build a solar-powered bitcoin mine in Texas</a>.



However, Bitcoin’s critics don’t often focus on the sources of energy miners use. Usually, they’re focused on the amount of energy used.



That was the rationale behind the proposal from the administration of US President Joe Biden <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">to levy a 30% tax on electricity used up by bitcoin miners</a>. The White House’s Council of Economic Advisors <a href="https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax/">argued</a> that the tax would encourage “firms to start taking better account of the harms they impose on society” and the environment.&nbsp;



KPMG pushed back on that view, citing a Harvard Business Review <a href="https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume">article</a> that said Bitcoin accounts for roughly 0.55% of the world’s electricity consumption — similar in scope to how much energy tumble-style laundry dryers use.



Read more: <a href="https://blockworks.co/news/bitcoin-mining-drying-laundry">Latest use for bitcoin mining rig heat: Laundry</a>



The Bitcoin Mining Council, an industry group, claimed in a 2022 fourth-quarter <a href="https://bitcoinminingcouncil.com/wp-content/uploads/2023/01/BMC-Q4-2022-Presentation.pdf">report</a> that Bitcoin’s global share is just 0.17% of the world’s energy production.



The KPMG report also delved into the nuances of energy grid function, particularly with renewable energy sources like solar and wind.&nbsp;



The issue with solar energy, the reported contends, is that it&#8217;s only available during the day, and wind is variable.&nbsp;



“Renewable energy facilities are incentivized to produce at their maximum capacity to deliver electricity in a manner consistent with their contractual agreements,” the report says. “This can leave utilities with an excess supply of electricity, which if coupled with a supply and demand mismatch, can lead to low, and even negative, electricity prices.”



Bitcoin miners can set up anywhere and often have the luxury to locate near renewable energy sources. Additionally, they can adjust their power consumption during times of excess supply and/or low market demand.



Bitcoin miners can actually “provide additional incentive to the buildout of renewable energy capacity,” the report’s authors argued.&nbsp;



KPMG’s report also highlighted the ways in which Bitcoin mining could improve sustainability and limit pollution.&nbsp;



For instance, it mentioned how mining rigs generate a significant heat byproduct while they’re running.&nbsp;



In June, Blockworks reported on a <a href="https://blockworks.co/news/brooklyn-bitcoin-mining-spa">Brooklyn spa that used miners to warm up their pools</a>, a phenomenon that got plenty of social media buzz at the time.&nbsp;



Beyond Bitcoin’s ability to power hot tubs, KPMG claims there’s a real possibility for Bitcoin to limit the amount of methane pollution, a greenhouse gas that is more than 25 times as potent as carbon dioxide.&nbsp;



A way to limit methane’s damage potential is through a process called gas flaring, which entails burning the gas before it can go directly into the atmosphere. KPMG once again cited the Harvard Business Review article, which claimed there is enough flared natural gas in the US and Canada alone to power the entire Bitcoin network.&nbsp;



Marathon Digital CEO Fred Thiel told Blockworks in May that the government should be doing more to tackle methane emissions and that bitcoin mining companies are the “perfect” partner in that fight.



“Give people incentives to convert methane gas into something less volatile,” Thiel said. “[Bitcoin miners] can set up operations at landfills where they can&#8217;t sell the electricity, where they can&#8217;t convert it into natural gas, and take that methane that&#8217;s seeping out into the atmosphere and convert it to carbon dioxide.”



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Bitcoin

Bitcoin is a boon to ESG: KPMG

Sebastian Sinclair

<div id="highlights-block_6357b2724b669" class="highlights">
 <ul>
 <li>KPMG reported a clear appetite for digital assets among some of Singapore and Hong Kong&#8217;s wealthiest investors</li>
 <li>All respondents already invested in crypto held bitcoin but less than half disclosed DeFi tokens</li>
 </ul>
 
</div>



Big Four accounting firm KPMG has indicated big interest in the crypto market from the wealthy elite of Singapore and Hong Kong.



KPMG surveyed 30 family offices and high net worth individuals across both regions for its inaugural Investing in Digital Assets <a href="https://assets.kpmg/content/dam/kpmg/cn/pdf/en/2022/10/investing-in-digital-assets.pdf" target="_blank" rel="noreferrer noopener">report</a>.



Of survey respondents, 58% reported skin in the crypto game while a further 34% intend to allocate funds to bitcoin, stablecoins and ether, as well as DeFi opportunities.



KPMG only gathered responses from investors whose assets under management ranged between $10 million to $500 million. Of the 58% already invested in crypto:



<ul class="wp-block-list"><li>100% held bitcoin,</li><li>87% disclosed ether,</li><li>60% bought NFTs and other metaverse tokens, and</li><li>47% had DeFi tokens.</li></ul>



Beyond the actual assets, 58% of respondents also said they were investing in crypto service providers, including exchanges and software developers.



The study was conducted jointly between KPMG China and financial services company Aspen Digital. Results were taken during the second quarter of this year. At the time, markets across the board were in turmoil with macroeconomic conditions, such as rising inflation, taking center stage.



KPMG found interest in crypto has mainly been driven by prospects of high returns, portfolio diversification and increased confidence in the market following institutional uptake.



It wasn’t all bullish, though, with respondents stating the industry needs more <a href="https://cms.blockworks.co/crypto-doesnt-care-about-fundamentals-is-that-sustainable/" target="_blank" rel="noreferrer noopener">mature methodologies</a> for valuing crypto, the lack of which has given some investors pause.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="502" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png" alt="" class="wp-image-35442" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/Screen-Shot-2022-10-25-at-12.01.05-1024x502.png?w=1856 1856w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Wealthy investors are keen on crypto&#8217;s &#8220;store of wealth&#8221; proposition alongside decentralized finance | Source: KPMG</figcaption></figure>



Not to mention, most already invested only allocated 5% of their portfolio to the digital asset class, a figure dampened by uncertainty around regulations and accounting standards.



The findings echo crypto exchange <a href="https://cms.blockworks.co/80-of-institutions-bullish-on-cryptos-future-survey-finds/" target="_blank" rel="noreferrer noopener">Bitstamp’s April Crypto Pulse survey</a> which found that 80% of institutional investors believe crypto stood poised to overtake traditional investment vehicles within a decade.



KPMG overall found regulatory uncertainty continues to be a roadblock for major players across Singapore and Hong Kong, with investors hungry for a clear regulatory framework that balances both investor protections and industry growth.



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Hong Kong

Crypto Spreading Among the Wealthy in Singapore, Hong Kong: KPMG

Casey Wagner

<div id="highlights-block_6317ae7fe716f" class="highlights">
 <ul>
 <li>Crypto’s winter is not over yet, consulting firm says</li>
 <li>As of the end of June 2022, crypto and blockchain investments totalled $14.2 billion</li>
 </ul>
 
</div>



As investment in both liquid cryptocurrencies and blockchain technologies continues to decline, KPMG analysts said they don’t yet see a bottom.&nbsp;



A lingering sluggish pace from deep-pocketed investors when it comes to crypto has the industry on track to finish 2022 far below its recent all-time highs, in terms of dollars spent.&nbsp;



As of the end of June, crypto and blockchain investments totalled $14.2 billion. In 2021, investors plowed an all-time high of $32.1 billion into the industry, primarily driven by institutional players.&nbsp;



“Prior to 2018, most crypto investment came from retail consumers,” KPMG wrote in a Tuesday <a href="https://assets.kpmg/content/dam/kpmg/sg/pdf/2022/09/pulse-of-fintech-h1-22.pdf" target="_blank" rel="noreferrer noopener">report</a>. “Since then, the investor profile has changed, with institutional and corporate investors now accounting for a much larger share of investment.”



The current <a href="https://cms.blockworks.co/higher-than-expected-jobs-report-not-enough-to-push-stocks-cryptos-green/" target="_blank" rel="noreferrer noopener">macroeconomic</a> landscape has meant that crypto is more <a href="https://cms.blockworks.co/bitcoins-correlation-with-stocks-bonds-hits-3-month-low/" target="_blank" rel="noreferrer noopener">tightly correlated</a> to broader markets, according to KPMG, making it trade more like a risk asset in recent months. 



Cryptos have struggled to turn around this year. Bitcoin and ether are both down more than 50% year to date, and — without a significant upward move — analysts are not expecting a rally. 



“With inflation, unfortunately bitcoin acts like a tech stock,” said Patrick Feeney, former hedge fund trader and founder of Feeney Factor. “[Bitcoin is] supposed to be digital gold, but it’s just not panning out that way lately.” 



As for the rest of 2022, KPMG calls for a “slowdown in crypto interest and investment, particularly retail firms offering coins, tokens and NFTs.”&nbsp;



The move toward decentralized finance is likely to survive the market downturn, KPMG analysts noted.&nbsp;



“Crypto and blockchain investments will increasingly focus on infrastructure: While investment in cryptocurrencies is expected to slowdown further, there will likely be a continued focus on the use of blockchain in financial market modernization,” the report said.&nbsp;



Areas ripe for innovation, per the firm: stablecoins, blockchain compliance and partnerships between crypto and traditional companies to address environmental, social and governance (ESG) concerns.&nbsp;



KPMG is confident “well-managed crypto companies with healthy risk management policies, long-term vision, and strong cost and risk management approaches” can survive the next six months.



Others will not.



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kpmg

KPMG Predicts Crypto Slowdown for Remainder of 2022

Ben Strack

<div id="highlights-block_62b2d2137ab4b" class="highlights">
 <ul>
 <li>The metaverse hub will allow KPMG employees, partners and clients to conduct virtual team meetings</li>
 <li>KPMG’s Canada business added bitcoin and ether to its corporate treasury and bought a World of Women NFT in February</li>
 </ul>
 
</div>



KPMG’s US and Canada businesses have launched a so-called collaboration hub in the metaverse as it seeks to help clients develop strategies within the space.&nbsp;&nbsp;



The private hub is a place where employees, partners and clients can conduct virtual team meetings and share ideas — using virtual whiteboards, for example, a spokesperson told Blockworks. They will also be able to conduct training sessions, job interviews and employee evaluations in the metaverse, as well as meetings to demonstrate KPMG’s services and capabilities.



“The metaverse is making it possible for us to experience the ‘phygital’ world, where physical and digital worlds collide,” Armughan Ahmad, president and managing partner of digital at KPMG in Canada, said in a statement. “The metaverse is a $13 trillion market opportunity that could boast as many as five billion users by 2030.”



KPMG International, a global network of firms headquartered in the Netherlands, reported roughly $32 billion in revenue for its 2021 fiscal year. The companies offer audit, tax and advisory services.



The KPMG representative did not name specific clients the company is working with but said “they are diverse in size, sector and scope.”



The company’s US and Canada businesses have formed dedicated teams of members with technology and innovation experience to offer support around metaverse design, use cases of NFTs, cryptoassets, community engagement and broader Web3 integrations.&nbsp;&nbsp;



These teams will assist KPMG clients during the implementation and operationalization stage of their metaverse journey. This includes services such as vendor selection, business and technical requirements design, systems integration and program governance for different metaverse activations.



KPMG is testing Web3 capabilities to institutions and regulators to increase their understanding of the space and its underlying technology.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’re exploring working with Web3 companies that offer staking services, decentralized borrowing and lending, for example,” the spokesperson said. “KPMG is committed to invest in both technology and people to address the increasing market demand for metaverse-related services.”</blockquote>



The move comes after KPMG in Canada <a href="https://cms.blockworks.co/kpmg-canada-adds-bitcoin-ether-to-balance-sheet/" target="_blank" rel="noreferrer noopener">added bitcoin and ether</a> to its corporate treasury in February and bought a <a href="https://worldofwomen.art/" target="_blank" rel="noreferrer noopener">World of Women</a> NFT later that month. 



KPMG’s US arm has integrated NFT- and crypto-related trainings into the process of onboarding new employees.



Despite a number of firms in the crypto space choosing to pause or slowing hiring efforts due to the space’s recent drawdown, KPMG is seeking to add more people with skills in blockchain technologies and DeFi.



“While the competition for top talent has been fierce,” a spokesperson said, “we are seeing signs of more skilled talent becoming available due to recent changes in Web3 and the broader tech industry.”



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Armughan Ahmad

KPMG Kicks Off Metaverse Collaboration Hub

<div id="highlights-block_6201490781b67" class="highlights">
 <ul>
 <li>KPMG in Canada is bullish on cryptoassets and could consider investments beyond BTC and ETH in the future, executive says</li>
 <li>The firm is educating institutions about the metaverse, NFTs and Decentralized Autonomous Organizations (DAOs)</li>
 </ul>
 
</div>



The Canadian arm of accounting giant KPMG International has joined a growing list of companies adding crypto to corporate treasury accounts.



The Toronto-based company, which offers ​​consulting, accounting, auditing and tax services, has added bitcoin and ether to its corporate treasury, the company said Monday.



KPMG International, a global network of firms headquartered in the Netherlands, reported roughly $32 billion in revenue for its 2021 fiscal year. The latest crypto investment was made by KPMG in Canada.



Since Michael Saylor’s MicroStrategy <a href="https://cms.blockworks.co/microstrategy-buys-1900-more-bitcoins/" target="_blank" rel="noreferrer noopener">added</a> bitcoin to its balance sheet, dozens of companies have followed suit in what industry participants view as a growth area for the space.



The assets were acquired through Gemini Trust Company’s execution and custody services. KPMG formed a governance committee to review the regulatory, reputational and custodial risks before approving the treasury allocation.



The company declined to disclose the amount of BTC and ETH purchased.



Kareem Sadek, a partner and advisory and risk consulting blockchain leader for KPMG Canada, told Blockworks the company is taking a “prudent” approach to the space and has so far only considered buying bitcoin and ether.



“This is one of the many initiatives in the cryptoasset space that we&#8217;re looking at,” Sadek said. “KPMG in Canada is bullish on cryptoassets. We believe they are here to stay, and we’ll consider other innovative investment opportunities in the future.”



Benjie Thomas, Canadian managing partner of advisory services for KPMG in Canada, said that hedge funds, family offices, insurers and pension funds are increasingly snapping up crypto.



Others, such as banks, financial advisors and brokerages, he added, are exploring the space, as well.



About 90% of institutions interested in crypto expect to allocate to the space by 2026, according to a <a href="https://cms.blockworks.co/fidelity-exec-fairly-long-tail-of-institutions-driving-mainstream-crypto-adoption/" target="_blank" rel="noreferrer noopener">recent Fidelity study</a>.



Next, KPMG Canada is looking to enable institutional participation in Web3, Sadek told Blockworks, with a focus on the metaverse, NFTs and Decentralized Autonomous Organizations (DAOs).



The firm offers crypto-related services when it comes to taxes, accounting and legal matters.



“Our DeFi workshops now include live demos of multiple applications, which inform how institutions can engage with applications and manage the associated risks,” Sadek said. “Being a multi-faceted professional services firm, we are uniquely positioned to engage with our clients in these workshops to share our insights that form the foundation of our support when helping in developing their strategy, roadmap and even proof-of-concepts.”



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