Alpha-Centric ESG Research

Kyle Rudden

<p>This Insight is about a trainwreck, the head-on collision of two megatrends in investing: ESG, and cryptocurrencies. "Trainwreck," because the raging cryptocurrency/ESG debate has spiraled out of control and made absolute lunatics out of everyone, environmentalists and crypto-zealots alike.</p><p>Cryptocurrency's environmental impact is not a recent epiphany. Back in 2009, Hal Finney (creator of Bitcoin's proof-of-work system, and even rumored to be the elusive Satoshi Nakamoto) tweeted, "<em>Thinking about how to reduce CO2 emissions from widespread Bitcoin implementation.</em>"</p><p>Prescient, but it didn't elicit a reaction because in 2009 few investors had even heard of Bitcoin and ESG. In 2021, however, Elon Musk's words are able to spark a firestorm because Bitcoin and ESG are now deeply ingrained in the collective investor psyche, and the zeitgeist.</p><p>And Elon Musk's words sure did spark a firestorm.</p><p>With this report, I hope to provide what is entirely absent in that firestorm – i.e., a comprehensive, rational, and balanced view of the multifaceted cryptocurrency/ESG relationships. Environmental, Social, <em>and</em> Governance. Including some issues that no one is talking about, but should be.</p>

This Insight is about a trainwreck, the head-on collision of two megatrends in investing: ESG, and cryptocurrencies. "Trainwreck," because the raging cryptocurrency/ESG debate has spiraled out of control and made absolute lunatics out of everyone, environmentalists and crypto-zealots alike.Cryptocurrency's environmental impact is not a recent epiphany. Back in 2009, Hal Finney (creator of Bitcoin's proof-of-work system, and even rumored to be the elusive Satoshi Nakamoto) tweeted, "Thinking about how to reduce CO2 emissions from widespread Bitcoin implementation."Prescient, but it didn't elicit a reaction because in 2009 few investors had even heard of Bitcoin and ESG. In 2021, however, Elon Musk's words are able to spark a firestorm because Bitcoin and ESG are now deeply ingrained in the collective investor psyche, and the zeitgeist.And Elon Musk's words sure did spark a firestorm.With this report, I hope to provide what is entirely absent in that firestorm – i.e., a comprehensive, rational, and balanced view of the multifaceted cryptocurrency/ESG relationships. Environmental, Social, and Governance. Including some issues that no one is talking about, but should be.

ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Cross Asset Strategy

<ul>
<li>While high volatility and the magic of Twitter may break cryptocurrency media coverage trends faster than they are identified, the exponentially growing volume of content on the topic has made text mining an increasingly robust tool to help quantify key themes in the space</li>
<li>Despite recent volatility, our data suggests sentiment on cryptocurrency institutional adoption continues to trend positively</li>
<li>We saw a +6x STDEV increase in coverage of ESG aspects of crypto and a +4x STDEV increase in coverage of crypto regulatory topics following the Elon Musk tweets of May 12-13 and China's crackdown; frequency of coverage of these topics has become the most dominant factor at -80% correlation with BTC recently </li>
<li>After surging in April on new ETF launches in Canada, sentiment on cryptocurrency ETFs/ETPs turned negative following "market disruption" warnings issued by Canadian ETF managers during last week's selloff</li>
<li>Sentiment on the cryptocurrency-as-store-of-value narrative took a dive in recent weeks, after hitting record high in April; nonetheless, the less-reliable defensive factors (store of value/inflation hedge) have been losing momentum in media coverage for some time, while a refocused view of cryptocurrency as a speculative vehicle is trending to new highs at +5x STDEVs</li>
<li>Though unadjusted sentiment data is extremely volatile, our daily tracking of Elon Musk coverage in a crypto context is back to a neutral reading for the first time since 5/12, having bottomed at -1.5x STDEVs earlier in the month</li>
<li>Net-net, while the data highlights elevated regulatory and ESG concerns, institutional adoption is likely to continue amid optimism around innovative carbon footprint reduction solutions for BTC; a reframing of the narrative away from defensive notions of "digital gold" would be a healthy development, and appears to be already underway</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities.</p></div>


While high volatility and the magic of Twitter may break cryptocurrency media coverage trends faster than they are identified, the exponentially growing volume of content on the topic has made text mining an increasingly robust tool to help quantify key themes in the space
Despite recent volatility, our data suggests sentiment on cryptocurrency institutional adoption continues to trend positively
We saw a +6x STDEV increase in coverage of ESG aspects of crypto and a +4x STDEV increase in coverage of crypto regulatory topics following the Elon Musk tweets of May 12-13 and China's crackdown; frequency of coverage of these topics has become the most dominant factor at -80% correlation with BTC recently 
After surging in April on new ETF launches in Canada, sentiment on cryptocurrency ETFs/ETPs turned negative following "market disruption" warnings issued by Canadian ETF managers during last week's selloff
Sentiment on the cryptocurrency-as-store-of-value narrative took a dive in recent weeks, after hitting record high in April; nonetheless, the less-reliable defensive factors (store of value/inflation hedge) have been losing momentum in media coverage for some time, while a refocused view of cryptocurrency as a speculative vehicle is trending to new highs at +5x STDEVs
Though unadjusted sentiment data is extremely volatile, our daily tracking of Elon Musk coverage in a crypto context is back to a neutral reading for the first time since 5/12, having bottomed at -1.5x STDEVs earlier in the month
Net-net, while the data highlights elevated regulatory and ESG concerns, institutional adoption is likely to continue amid optimism around innovative carbon footprint reduction solutions for BTC; a reframing of the narrative away from defensive notions of "digital gold" would be a healthy development, and appears to be already underway
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities.

TMI Snapshot:  Recent Crypto Media Coverage & Sentiment Trends Through the Lens of Text Mining

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>Cracking down on cryptocurrency</li>
<li>And on Big Tech too</li>
<li>World-beating vaccination rates</li>
<li>“Cold War mindset and gross interference” </li>
<li>You sent your battleship!</li>
</ul><div class="content-remarks"><p>In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</p></div>

China News That Matters
Cracking down on cryptocurrency
And on Big Tech too
World-beating vaccination rates
“Cold War mindset and gross interference” 
You sent your battleship!
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Crypto/ Tech/ Covid-19/ US-China/ UK-China

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<p>It’s a bad week for crypto, with bitcoin off ~30%.  Firstly, Elon Musk has done a U-turn, now not accepting bitcoin as payment for Tesla due to environmental concerns.  He may also wind down the company’s position in the asset.</p>

It’s a bad week for crypto, with bitcoin off ~30%.  Firstly, Elon Musk has done a U-turn, now not accepting bitcoin as payment for Tesla due to environmental concerns.  He may also wind down the company’s position in the asset.

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Crypto

<p>The fall on Bitcoin through the 41,000-42,000 area requires a refreshed chart to see where we might go next, probably in the short run.</p><p>This chart suggest a further decline to the tune of 25% from current levels.</p>

The fall on Bitcoin through the 41,000-42,000 area requires a refreshed chart to see where we might go next, probably in the short run.This chart suggest a further decline to the tune of 25% from current levels.

United States

Virtual currencies are decentralized, math-based digital assets in which transactions can be performed cryptographically without the need for a central issuing authority. The first specification and proof of concept of Bitcoin, the first widely used virtual currency, was published in 2009 based on a paper published pseudonymously by Satoshi Nakamoto.

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ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans

Elon sparked a firestorm over Bitcoin's climate impacts. Problem is, it's all "greenwashing" by crypto-zealots or "brownwashing" by...

Kyle Rudden

TMI Snapshot: Recent Crypto Media Coverage & Sentiment Trends Through the Lens of Text Mining

We text-mine media coverage of cryptocurrencies to quantify key sub-themes; institutional adoption sentiment has remained positive throughout the...

Elan Gore

Crypto/ Tech/ Covid-19/ US-China/ UK-China

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Weekly Innovation Review (WIRE) #32

Subscribe nowHeadline Developments It’s a bad week for crypto, with bitcoin off ~30%. Firstly, Elon Musk has done a U-turn, now not accepting...

Granite Bay Capital

Bitcoin - Ready for 0% YTD?

The break lower on Bitcoin over the past 24 hours warrants a refreshed chart which gives us important downside targets. Are we about to reverse all...

Shyam Devani

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