Implications of cryptocurrency energy usage on climate change

Zhang, Dongna; Chen, Xihui Haviour; Lau, Chi Keung Marco; Xu, Bing

Abstract

This study investigates the environmental implications of cryptocurrency energy consumption on climate change. Using a spectrum of approaches, including Granger causality across quantiles, cross-quantilograms, and dynamic connectedness, we provide novel evidence on the nexus between Bitcoin mining and climate change. First, we find a significant Granger causality between carbon dioxide (CO2) emissions and the energy usage of Bitcoin that concentrates on the right-tail quantiles. Second, we show that the directional predictability from hash rate, blockchain size, and Bitcoin returns to Bitcoin electricity consumption is heterogeneous. We also discover significant directional predictability between the energy usage of Bitcoin mining and CO2 emissions. Third, the dynamic connectedness results show that hash rate transmits the most substantial net spillover effects to CO2 emissions and Bitcoin electricity consumption. Accordingly, hash rate exerts a major influence on Bitcoin electricity consumption and climate change. This study highlights the necessity of stimulating technological advances in developing energy-efficient decentralized finance consensus algorithms to transform the cryptocurrency market into a climate-friendly market. The results provide policy implications by emphasizing the importance of cryptocurrency ecosystem decarbonization in addressing environmental concerns.

Citation

Zhang, D., Chen, X. H., Lau, C. K. M., & Xu, B. (2023). Implications of cryptocurrency energy usage on climate change. Technological Forecasting and Social Change, 187, Article 122219. https://doi.org/10.1016/j.techfore.2022.122219

• Journal Article Type: Article
• Acceptance Date: Nov 21, 2022
• Online Publication Date: Dec 1, 2022
• Publication Date: 2023-02
• Deposit Date: Mar 4, 2024
• Publicly Available Date: Dec 2, 2024
• Journal: Technological Forecasting and Social Change
• Print ISSN: 0040-1625
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 187
• Article Number: 122219
• DOI: https://doi.org/10.1016/j.techfore.2022.122219
• Keywords: Management of Technology and Innovation; Applied Psychology; Business and International Management
• Additional Information: This article is maintained by: Elsevier; Article Title: Implications of cryptocurrency energy usage on climate change; Journal Title: Technological Forecasting and Social Change; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.techfore.2022.122219; Content Type: article; Copyright: © 2022 Elsevier Inc. All rights reserved.