🚀 High-Risk but High-Altitude: Bitcoin as a Satellite Allocation?

I'm currently wrestling with a phone that likes to switch itself off at random, whenever it feels like it (grrr!) — a sharp reminder of just how much I rely on the thing!

Just one of many technologies that we rely on that, when you stop to think about it, are quite extraordinary wonders of the modern world. A second example: satellites. Dozens of them circle the planet every day, powering everything from your phone signal to real-time climate data. Some orbit the Earth in just 90 minutes — travelling seven times faster than a speeding bullet!

Satellites have also become crucial in our fight to understand and rectify what's happening to our planet. They help us measure rising global temperatures, track methane leaks, monitor melting ice sheets, and even predict wildfires. They’re also aiding climate-smart farming — watching rainfall, soil moisture and crop health from hundreds of kilometres above.

The precision is mind-blowing. Take Sentinel-6 — launched in 2020 — which measures sea levels to within 2–3 mm. Its observations are how we know sea levels are rising by roughly 3.3 mm each year. Or the WorldView-3 satellite, capable of spotting individual trees to a 31cm resolution, and tracking subtle changes in leaf colour that signal stress or disease.

Why satellites you may ask? In the investment world we have terminology called a "satellite portfolio allocation". Your core portfolio allocation (often 70%-90% of your investment portfolio) is likely to involve traditional asset classes such as stocks and bonds, which many often consider as a "dependable" source of long-term growth. Although this is increasingly coming under question — as I've talked about in my from previous articles.

The remainder could be invested in other assets that may behave differently to your traditional asset classes, to provide some diversification and manage risk in turbulent markets. They could be a chance to express more personal investment views, take a position on alternative assets that might outperform, or be a high-risk bet that is small enough to stay within your comfort zone.

There is one such high-risk bet that has been occupying my mind recently: Cryptocurrency. The most of famous of which is: Bitcoin.

Being a professional risk manager, my view on cryptocurrency up until now has been that it is simply too volatile to be a "serious investment". But a couple of charts have recently "blown my mind", and made me realise it’s probably time to rethink things.

Perspectives on Historic Performance

Firstly, this chart below illustrates how the price of Bitcoin has performed since the launch of the first Bitcoin exchange in July of 2010. The price of the S&P 500 over the same period is in red — practically a straight line in comparison. That is the extent to which Bitcoin has outperformed!

Data source = Bloomberg

The start of the chart looks visually like a straight line for both. Yet, if we Zoom in on just performance until mid-2017 below, we see that it is anything but!

Data source = Bloomberg

Courtesy of Blackrock, an alternative way of viewing the first graph, using the magic of a "logarithmic scale". It's a numerical format that helps compare very large numbers with much smaller numbers on the same graph. The magic helps make it look visually less volatile, and potentially less risky to invest in. But let's not forget the logarithmic scale makes those drops in value of 70%-90% every four years or so, look like small bumps in the road.

Source = Blackrock, Bloomberg

This last point about the 4-year cycle is one of the key features that has recently been pointed out to me. It is explained by an inherent feature to Bitcoin called the "halving cycle". We can remove this effect of this cycle by looking at the 4-year average price over time, shown below — this is the graph that got my attention. Suddenly we have what looks like a fairly smooth upward line, which when considered as a long-term investment, starts to make it more enticing!

Source = Bloomberg

But nonetheless we must remember some all important disclaimers:

• This article provides information only, and should not be considered investment advice or a recommendation to invest. It is for you to make your own mind up.
• Past performance is not necessarily a guide to the future.
• Despite the smooth 4-year average performance, there is a clearly a lot of price volatility that makes it highly risky over the short-term.

What is Bitcoin?

For those new to Bitcoin, firstly a few quick explanations.

At its core, Bitcoin is a decentralised digital currency—a peer-to-peer payment system that operates independently of any central bank or government. It’s powered by blockchain technology, an immutable public ledger maintained by a global network of computers (known as nodes), which verify and record transactions through cryptographic validation. This system ensures both security and transparency, as every transaction is visible, traceable, and cannot be altered retroactively.

Why does this matter?

Because Bitcoin is not just another asset class — it’s a fundamental rethinking of how money, trust, and value exchange can function in the digital age. In a world where traditional institutions are increasingly questioned — whether due to financial instability, political polarisation, or opaque monetary policies — Bitcoin offers a counter-narrative. It’s money without a middleman, built on rules rather than rulers.

What is the "halving-cycle"?

A key feature that shapes Bitcoin’s long-term value trajectory is its “halving cycle" — a programmed event that occurs approximately every four years. During a halving, the reward that miners receive for validating transactions is cut in half, meaning fewer new bitcoins are introduced into circulation. This built-in scarcity mechanism mimics the deflationary nature of gold and plays a central role in Bitcoin’s economic model. Historically, each halving has triggered a multi-year price cycle: a period of accumulation, a bull run, a market correction, and then consolidation before the next halving. While not a guarantee of future performance, the rhythm of these cycles has created a predictable framework that both institutional and retail investors watch closely.

How to find out more?

As with any new asset class you invest in, its important to do your homework to understand what you are investing in. AI is undoubtedly a useful tool in helping to educate us quickly.

There seems to be an entire art now to using AI prompts effectively to get the best information. But thankfully AI can also help you with that too! I simply asked AI for the best prompt to use with AI. Rather than regurgitate further information in this blog, here's an AI prompt for you to use:

"Explain Bitcoin to a beginner investor: What it is, how it works, why it matters, and what the risks are. Include a simple explanation of blockchain, how people buy and store Bitcoin, and whether it's considered a good long-term investment. Also mention environmental concerns and how they are being addressed."

But ultimately a question for yourself. Would you base your judgement on something new simply on information provided by AI? The best reassurance likely comes from combining both human wisdom with artificial intelligence — getting the best out of both objective and subjective view points.

One of our Academy of Life Planners specialises in this topic. He has recently launched a new website and podcast — the Bitcoin IFA — which offers some carefully curated information and insights on Bitcoin to help you deepen your understanding of this emerging topic.

Planet Positive Considerations

It’s not just the volatility — Bitcoin’s sustainability has also made me doubtful in the past. Bitcoin mining has a notorious reputation for the amount of energy it requires, and its associated carbon footprint.

Here are 4 new thoughts around this.

1) Improving efficiency and clean energy usage

The 2024 Cambridge Digital Mining Industry Report shows that Bitcoin mining is evolving fast — with real progress on sustainability, efficiency, and innovation. Mining hardware is now 24% more energy-efficient, yet total electricity use still jumped 17% year-on-year, hitting 138 TWh — about 0.54% of global usage. Electricity remains the biggest cost for miners, making up over 80% of their operating expenses.

The sector is still dominated by North America, with the U.S. accounting for 75% of reported activity, but new players are emerging in South America, the Middle East, and Northern Europe. There’s also a significant green shift: 52.4% of Bitcoin mining now uses sustainable energy — up from 37.6% in 2022. Natural gas has overtaken coal as the main energy source, and 9.8% of mining is powered by nuclear.

Miners aren’t just using energy — they’re helping manage it. In 2023, they curtailed 888 GWh of load, showing potential as flexible demand that can support the grid. They’re also getting smarter with waste: 87% of retired hardware is reused, repurposed or recycled.

But challenges remain. Energy price volatility, regulatory uncertainty, and a highly concentrated hardware market are top concerns. In response, many mining firms are now diversifying — moving into AI, high-performance computing (HPC), and exploring innovative energy strategies like flared gas capture and waste-heat recovery.

Bottom line? Bitcoin mining is getting leaner, greener, and more grid-aware — but it's still a high-stakes, fast-evolving space that demands smart, sustainable thinking.

2) A greener way — alternative cryptocurrencies

While Bitcoin relies on an energy-hungry process called proof-of-work (PoW), there is another generation of cryptocurrencies addressing this issue with an alternative process called proof-of-stake (PoS).

In PoS, there's no race to solve complex puzzles. Instead, validators are chosen to confirm transactions based on how much of the cryptocurrency they’ve “staked” — locked up as collateral. This simple shift slashes energy consumption by over 99% compared to PoW.

Some of the most well-known PoS-based projects include Ethereum (after its 2022 “Merge” upgrade), Cardano, Solana, and Polkadot. These platforms are building decentralised systems without the massive carbon footprint.

They’re not just greener — they’re also faster, more scalable, and in many cases, cheaper to use than Bitcoin.

While their market behaviour and investment potential differ from Bitcoin, they represent a fast-growing corner of the crypto world — one that aligns better with climate goals and the urgent need for cleaner tech.

One thing to be cautious about though is the risk of scams masquerading as legitimate alternative cryptocurrencies — this article offers more insight.

3) Another greener way — exchange-traded funds

Exchange-traded funds (ETFs) offer a more accessible and potentially greener way to gain exposure to the asset without directly owning or interacting with the underlying cryptocurrency.

A Bitcoin ETF allows investors to buy shares that track the price of Bitcoin, just like buying stock in a company, through a traditional brokerage account. This eliminates the need to manage digital wallets, worry about private keys, or deal with crypto exchanges. It could potentially be advantageous from a tax wrapper perspective too. From an environmental standpoint, investing in a Bitcoin ETF doesn’t require any new Bitcoin to be mined — in other words, you’re trading the price, not the coin. This means your investment doesn't directly contribute to the energy consumption of the Bitcoin network.

This all sounds great. Although unfortunately, unlike in other countries such as the US and Sweden, Bitcoin ETFs are only available to professional investors in the UK at present. There may be some hurdles to get through to classify yourself as a professional investor. But watch this space, the UK regulator has published their roadmap to allow regulated Bitcoin ETFs to be made available to retail investors in 2026.

The other alternative are ETF products that invest in companies in the Bitcoin sector — a "Proxy Bitcoin ETF". The value of these companies is highly correlated to the price of Bitcoin. However, it is not guaranteed to have a similar return trajectory.

While ETFs come with management fees and may not exactly match Bitcoin’s price movements (due to tracking error), they offer a regulated, user-friendly way for traditional investors to dip a toe into the crypto space —without amplifying its carbon footprint.

4) Bitcoin — a "wicked problem hedge"?

We’ve previously explored the idea of “wicked problems” and the growing poly-crisis confronting our planet — climate breakdown, inequality, ecological collapse — all symptoms of a global system that is proving increasingly unsustainable. As faith in exploitative capitalism fades, many are asking: What comes next?

One proposed answer is decentralisation — a fundamental shift away from top-down control. This is the ethos on which Bitcoin is built, making it more than just an investment. It has become a symbol of resistance to centralised financial power and a store of value for those who see cracks forming in the legacy economic architecture.

Often called “digital gold,” Bitcoin is finite in supply (capped at 21 million), immune to inflationary tinkering, and transferable without intermediaries. That appeal is no longer fringe. Institutional players like BlackRock and Fidelity have acknowledged Bitcoin’s role as a macroeconomic sentiment indicator — its price movements increasingly tracking trust (or lack thereof) in fiat currencies, central banks, and systemic stability.

As we navigate overlapping transitions — economic, ecological, and technological — Bitcoin offers a kind of optionality. For some, it’s a hedge against the old system. For others, it’s a high-risk, high-reward asset. But either way, it's becoming harder to dismiss. Bitcoin is no longer just speculative — it’s a barometer of belief in the future of money, governance, and global coordination.

Practical Investment Considerations

Note: The content in this article is for informational purposes only and should not be considered investment advice. Always do your own research and make decisions that suit your personal financial circumstances.

But if you’re considering it, here are a few practical points to keep in mind:

1. How much is ‘small’?
Given the high-risk, high-reward nature of Bitcoin — and the impressive returns suggested by past performance — even a small investment could yield outsized results. Think of it like money you might take to a casino: an amount you're comfortable losing. For long-term planning, such as where you are using the HAPNAV app used in Planet Positive GAME Plan to assess whether you're on track for future life goals, it may be wise to also exclude your crypto holdings until long-term gains are sold and realised in cash.

2. Invest regularly, not all at once
Rather than making a single lump-sum purchase, consider spreading your investment over time. This approach, known as dollar-cost averaging, helps reduce the risk of buying at a peak and smooths out the volatility in your entry price. That said, Bitcoin follows a unique 4-year halving cycle, so timing may also play a strategic role. Staying aware of where we are in that cycle can help inform your decisions.

3. Be alert — crypto scams are soaring.
In the UK alone, fraud losses topped £300 million in 2023, with scams now making up two-thirds of all investment fraud. Tactics range from fake platforms to AI-generated celebrity endorsements, often targeting both young risk-takers and older, more trusting investors. With regulation still catching up, staying cautious is key — if it sounds too good to be true, it probably is. See this article for more insights.

4. Make it part of your learning journey
Start small. Stay curious. Think long term. Bitcoin isn’t just a financial asset — it’s a window into how economic systems are evolving. Whether or not it becomes a major part of your portfolio, engaging with it can sharpen your understanding of money, decentralisation, and the changing shape of global finance.

Bitcoin might not be for everyone, but it’s definitely worth a second look. As a small, high-risk satellite allocation, it could add an exciting edge to your portfolio — while helping you stay connected to the broader changes reshaping how we think about money and value.

As always, any questions, thoughts or comments, feel free to hit reply!

Disclaimer:
The information provided is for general informational purposes only and does not constitute investment, financial, tax, or legal advice. Please be aware that an investment strategy that is appropriate for one person, may not be appropriate to another, including yourself. Past performance is not indicative of future results. In tailoring your own personal investment strategy it is recommended to speak to a qualified professional.