Caisse de dépôt et placement du Québec announced last week that it is taking part in a US$400-million investment in Celsius Network, a New Jersey-based cryptocurrency-lending platform.
Paul Chiasson/The Canadian Press
The Caisse de dépôt et placement du Québec’s first-ever investment in a cryptocurrency company is providing Canadians with a reality check on its climate commitments.
U.S. private-equity firm WestCap Group is the lead investor in that transaction. Nonetheless, the Caisse’s involvement is raising eyebrows. That’s because Canadian pension funds, which generally have conservative risk appetites, have largely eschewed significant investments in crypto companies. But this particular investment is also curious because it is inconsistent with the Caisse’s recent environmental evangelism.
To be clear, Celsius Network is not a cryptocurrency. Rather, the company facilitates cryptocurrency lending to retail and institutional investors.
Celsius Network, though, does earn some revenue from cryptocurrency mining. That’s the process through which computers create new digital coins by solving complex mathematical equations to verify transactions and record them on a public digital ledger.
Since cryptocurrency mining requires significant computing power, the process is energy intensive, results in greenhouse gas emissions and contributes to climate change.
Although Celsius Network is not primarily a cryptocurrency miner, digital currencies are integral to its business model. That means Celsius Network (and by extension the Caisse as one of its investors) reaps benefits from other people’s mining.
For its part, the Caisse is defending its investment in Celsius Network.
“Celsius is a lending platform – not a cryptocurrency – that provides access to fair, rewarding, and transparent financial services, with mining operations that account for a small portion of revenue and are based exclusively in North America, where it can primarily rely on renewable energy sources,” Alexandre Synnett, executive vice-president and chief technology officer at the Caisse, said in an e-mailed statement.
“More importantly, it is also a carbon-neutral business and we expect this to continue going forward,” he added.
The devil, of course, is in the details. For instance, the Caisse can’t guarantee that all cryptocurrency deposited and lent out on Celsius Network’s platform was created using renewable energy.
To illustrate this point, one only needs to consider the environmental impact of bitcoin, which is the world’s most popular cryptocurrency.
Although some proponents have previously claimed that a majority of bitcoin miners use renewable energy, a 2020 study from the University of Cambridge concluded that renewables comprise only 39 per cent of the total energy consumption for mining.
The Caisse declined to say how it will provide its stakeholders with climate-related disclosures for its Celsius Network investment from here on out.
Other institutional investors are paying close attention to the Caisse’s debut investment in this space. That’s precisely why the Task Force on Climate-related Financial Disclosures should provide detailed guidance on divulging the nitty-gritty of crypto-related investments.
The Caisse’s investment in Celsius Network, however, is just the latest indication that there are limits to its commitment to fight climate change.
Although the pension fund manager plans to sell off its remaining oil-producing assets and establish a $10-billion fund to decarbonize other high-emitting industrial sectors, it won’t divest its investments in oil and gas pipelines.
So, oil-producing assets are unacceptable, but pipelines and an investment in a cryptocurrency company are A-okay? It takes mental gymnastics to reconcile these exceptions with the Caisse’s public pledge to protect the environment.
The Caisse should just admit that it’s a casual climate crusader that has every intention of cherry-picking its goals. It should also come clean about any other caveats in its new climate change plan.
This issue doesn’t just concern Quebeckers. The Caisse has $390-billion in assets, which means its investment decisions matter to the country as a whole.
We get it. It’s not easy being green. But please spare us the spin.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
