Bitcoin “mining” – the creation of new currency through answering equations which intensifies in difficulty based on the level of active miners – requires energy-hungry machines that emit greenhouse gas emissions to solve the problems.

And with this, Tesla’s headline grabbing commitment is problematic; it contradicts its ethos to “accelerate the world’s transition to sustainable energy”, and ultimately further drives the Bitcoin mining effort. It is estimated that the annual energy consumption of mining matches that of various countries around the world, sitting only marginally behind that of Chile. Worse still, two-thirds of bitcoin mining is taking place in coal-energy dominated areas like China, where its carbon footprint will be the most significant.

Then there’s the social impact of Bitcoin. Lending or investments linked to cryptoassets can provide high returns, but come with no ownership rights or utilities. If consumers invest in these products, they need to understand the volatility involved and should be prepared to lose a substantial part of their money – something many investors may choose to ignore in the efforts to follow in Elon Musk’s footsteps.

It’s clear that tackling these issues will be no easy feat, as it can be hard to apply governance to cryptocurrencies. A positive start would be the carbon taxation of bitcoin mining, or the even the restriction of mining to clean energy intensive destinations in an effort to begin to combat its emissions problem.

Firms offering crypto products need to consider the environmental impact of them, as well as compliance with all the relevant regulatory requirements, particularly as we’re likely to see further action from regulatory bodies on this front.

With the JPES Asset Management Agenda 2021 report indicating that managers will have to start demonstrating their social responsibility credentials, in the midst of greater scrutiny of how they engage with their underlying investments – crypto might not be so sustainable for managers.