Should You Invest In the ESG Bitcoin Mining ETF? (RIGZ Review)

Many sustainability-minded investors think that energy-intensive crypto mining and environmental, social, and governance (ESG) concerns aren’t compatible. Yet the first ESG crypto mining exchange-traded fund (ETF), the Viridi Clean Energy Crypto Mining & Semiconductor ETF (RIGZ), has just launched. Should you invest?

SustainFi July 22, 2021

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What is RIGZ, the first ESG Bitcoin mining ETF?

Fund nameViridi Clean Energy Crypto Mining & Semiconductor ETF
TickerRIGZ
Assets under management<$1m
Launch date7/20/2021
Expense ratio0.90%
Number of holdings20
Top 3 holdingsMARATHON DIGITAL HOLDINGS INC, BITFARMS LTD, HUT 8 MNG CORP

Data as of 7/21/2021

The Viridi Clean Energy Crypto Mining & Semiconductor ETF (RIGZ) is an actively managed ETF that capitalizes on the interest in both Bitcoin and ESG investing. The ETF was listed on the New York Stock Exchange in July 2021.

The fund invests in cryptocurrency infrastructure, including sustainable cryptocurrency miners and computer chip manufacturers. If the fund grows, it should encourage more miners to use renewable energy sources, such as wind, hydro or solar power, to mine Bitcoin.

RIGZ doesn’t invest in cryptocurrencies directly. However, you will still have exposure to cryptocurrencies through the fund’s investments in miners and computer chips.

Can Bitcoin mining be sustainable?

Bitcoin is thought to be bad for the environment because crypto mining is very energy-intensive. To mine Bitcoin, powerful computers must solve computational puzzles based on a proof-of-work algorithm. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin’s energy consumption is equivalent to that of a small country like Sweden.

But energy consumption is not the only thing that matters. What matters is whether the energy used to mine Bitcoin is renewable or not. Given the lack of data, it isn’t clear what percentage of Bitcoin is mined using fossil fuels like coal versus renewable energy sources. We do know that as much as three-quarters of the mining takes place in coal-reliant China. Therefore, a lot of the energy used to mine Bitcoin likely comes from coal. Yet China also has a lot of hydropower, a clean energy source. China’s hydropower-rich regions, Sichuan and Yunnan, are the centers of the Chinese crypto mining industry.

Even so, the Cambridge Center for Alternative Finance (CCAF) estimates that only 39% of Bitcoin’s energy consumption comes from carbon-neutral sources. Underlining the concerns about fossil fuels, Bitcoin investor and Tesla CEO Elon Musk recently tweeted that “we are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

However, emissions from Bitcoin mining could be reduced if the mining is powered by renewable energy. Recognizing that, several miners have joined the Crypto Climate Accord, an initiative to reduce crypto mining emissions. In addition, Crypto.com has announced its decision to become carbon-negative by the end of 2022. And some investors are pairing Bitcoin and crypto holdings with carbon offsets.

According to Viridi Funds, over 50% of North American mining is already done using renewable energy. And, as the world transition to renewables, more energy used to mine Bitcoin will come from carbon-neutral sources.

Environmental concerns aside, Bitcoin advocates argue that cryptocurrencies promote financial inclusion among the underbanked. For example, there are publicized cases of refugees using Bitcoin while escaping from authoritarian regimes.

Of course, these benefits need to be weighed against Bitcoin’s well-known use in criminal activity, including money laundering and ransomware attacks.

The jury is still out on whether Bitcoin can be environmentally sustainable and whether it is a force for good or not.

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How does the RIGZ ETF invest?

RIGZ doesn’t buy cryptocurrencies directly. Instead, the fund invests in crypto infrastructure, including miners and producers of computer chips:

  • Clean energy cryptocurrency miners. Miners invest in mining rigs used to solve complicated mathematical puzzles. In return, miners are rewarded with new cryptocurrencies they can sell 
  • Computer chip (or semiconductor) manufacturers. The ETF also invests in the manufacturers of computer chips used for mining cryptocurrencies, such as NVIDIA (NVDA) and AMD

Miners – but not semiconductor manufacturers – are screened using clean energy criteria, including:

  • The energy mix of the miner’s operation (e.g., natural gas, coal, wind power)
  • Purchased carbon offsets
  • Future expected clean energy commitments made by the miner in press releases or regulatory filings

These criteria are used to calculate scores for each miner. Only miners with scores below the RIGZ-defined benchmark are classified as “clean energy miners” that can be included in the fund. However, miners that use dirty energy sources (like coal) can still pass the test by purchasing enough carbon offsets. (Carbon offsets reduce emissions by financing green projects like planting forests.)

🔔 Looking for other ways to buy sustainable crypto? Learn more here.

What are the RIGZ ETF’s holdings?

RIGZ will invest in 15 to 30 U.S. and developed markets international stocks. As of July 21, 2021, the ETF had 20 holdings. As advertised, the fund’s holdings are mainly crypto miners and chip manufacturers.

Top 10 Holdings% of Fund
MARATHON DIGITAL HOLDINGS INC (MARA)10.82%
BITFARMS LTD (BITF)9.42%
HUT 8 MNG CORP (HUT)9.41%
SAMSUNG ELECTRONIC (SMSN LI)7.60%
NVIDIA CORPORATION (NVDA)6.18%
DMG BLOCKCHAIN SOLUTIONS INC (DMGGF)4.43%
RIOT BLOCKCHAIN INC (RIOT)4.43%
HIVE BLOCKCHAIN TECHNLGIES LTD COM (HVBT)4.37%
CLEANSPARK INC (CLSK)4.35%
ADVANCED MICRO DEVICES INC (AMD)4.29%

Data as of 7/21/2021

Note: Investments in cryptocurrency miners can be more volatile than buying crypto directly. The cost of mining doesn’t change as crypto prices go up or down, creating an outsized impact on miners’ profits and share prices.

Is the RIGZ ETF expensive?

RIGZ charges 0.90% annually ($90 on a $10,000 investment). This expense ratio is in line with other actively managed ETFs.

In comparison, investing in a U.S. stock market ETF is much cheaper. (The expense ratio of the Vanguard S&P 500 ETF (VOO) is only 0.03%.)

Who is behind the RIGZ ETF?

RIGZ is an actively managed ETF advised by Viridi Funds, a first-time ETF issuer.

According to its website, Viridi Funds is a a registered investment advisor “focused on providing modern investment products that consider environmental concerns.”

Viridi Funds will seek to use industry knowledge to pick undervalued crypto miner stocks. (Viridi Funds’ CEO, Wes Fulford, was the CEO of Bitfarms Ltd, a publicly-traded cryptocurrency mining company.)

💰 Takeaway

Without a doubt, Bitcoin mining is very energy-intensive. But, if you think that crypto is an important asset class and want to get more exposure to it, it makes sense to find the cleanest way to do so.


🔔 Looking for other ways to buy sustainable crypto? Learn more here.

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