An analysis of energy consumption and carbon footprints of cryptocurrencies and possible solutions

Kohli, Varun; Chakravarty, Sombuddha; Chamola, Vinay; Sangwan, Kuldip Singh; Zeadally, Sherali

doi:10.1016/j.dcan.2022.06.017

Cited by 41 publications

(24 citation statements)

References 42 publications

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“…Despite FinTech's promises, FinTech firms face Expediting financial inclusion in Tanzania challenges such as regulatory and compliance risks, rapid technological change, unstable technology infrastructure and trust (Frost, 2020;J€ unger and Mietzner, 2020;Najaf et al, 2021). Moreover, FinTech infrastructure needs fossil energy to operate, contributing to escalated levels of CO 2 emission (Kohli et al, 2023). For instance, cryptocurrency mining consumes high levels of energy, which contributes to high levels of CO 2 (Hajipour et al, 2022;Zhang et al, 2023).…”

Section: Literature Review Fintech Financial Inclusion and Environmentmentioning

confidence: 99%

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Expediting financial inclusion in Tanzania using FinTech: the perspective of diffusion of innovation theory

Koloseni,

Mandari

2024

TECHS

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PurposeThe purpose of this paper is examining how financial inclusion can be enhanced in rural and remote areas in emerging economies through the adoption of Financial technologies. The study examines the direct influence of technological characteristics, facilitating conditions, trust and perceived risk on adoption of FinTech. Furthermore, the study examines the mediating effects of facilitating conditions and moderating effects of education level in adoption of FinTech.Design/methodology/approachThe study employed quantitative research design. Stratified and simple random sampling were employed to identify areas in which respondents will be collected. Drop and Pick method was further employed to collect 275 valid and reliable responses. Structural equation modeling was used to analyze the data and assess the reliability and validity of the measurement model. Structural model analysis was employed to examine the hypothesized relationship.FindingsThe results show that compatibility, complexity agent trust, perceived risk and facilitating have significant influence on adoption of FinTech. Furthermore, the findings show that facilitating conditions mediate the relationship between all technological characteristics and FinTech adoption except the relationship between compatibility and FinTech. The study also has found that education level moderates the relationship between observability and FinTech adoption as well as trialability and FinTech adoption.Research limitations/implicationsThis study employed cross-sectional research-based techniques in collecting data for analyzing the hypothesized relationship. However, the drawback of cross-sectional may impact the findings of this study over a long time. Therefore, future studies must consider conducting longitudinal studies which may collect data over some time for analysis of the FinTech adoption. Furthermore, the generalization of these findings should be considered carefully by other countries which are not economically similar to Tanzania and developed countries. This also provides room for future studies to examine the same area in countries with different economic development.Originality/valueThis study contributes to knowledge into two folds: First there is limited knowledge on adoption of FinTech in emerging economies; the study addresses the knowledge gap by providing empirical findings which will help scholar. Furthermore, less studies have examined the moderating effects of facilitating condition in adoption of technology. This study addresses the knowledge gap by examining the moderating influence of moderating influence of facilitating conditions. Also, this study provides empirical findings which will help policymakers to implement strategy that will speed-up financial inclusion in rural and isolated areas in emerging economies.

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Section: Literature Review Fintech Financial Inclusion and Environmentmentioning

confidence: 99%

“…Moreover, FinTech infrastructure needs fossil energy to operate, contributing to escalated levels of CO 2 emission (Kohli et al ., 2023). For instance, cryptocurrency mining consumes high levels of energy, which contributes to high levels of CO 2 (Hajipour et al ., 2022; Zhang et al ., 2023).…”

Section: Literature Reviewmentioning

confidence: 99%

Expediting financial inclusion in Tanzania using FinTech: the perspective of diffusion of innovation theory

Koloseni,

Mandari

2024

TECHS

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“…Further study by Kohli et al [69] reveals that in contrast to the big player Bitcoin and Ehereum, smaller cryptocurrencies, such as IOTA (FPC) and Hedera (Hashgraph), consume typically between 10 −4 and 10 −2 kWh, respectively, the latter thus consuming ~36 kJ per hour = ~315.4 MJ per year. This gives some credence to the value proposed by the short analysis above, starting from first principles, of ~2 MJ per year for a single blockchain active company.…”

Section: Further Expansion Opportunities and Potential Roadblocks For...mentioning

confidence: 99%

Regulatory Paradigm and Challenge for Blockchain Integration of Decentralized Systems: Example—Renewable Energy Grids

et al. 2023

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Nowadays, fossil fuels are used in a clearly unsustainable way that can bring potentially catastrophic consequences. Electricity is currently delivered to end users by generation and energy transmission companies. Previous research shows that the development of modern circular economy sets a need for the re-orientation of socio and economic development of decentralized systems, including energy basis. In addition to being ecological, the use of renewable energy sources also has economic significance by contributing to energy independence. Citizens, industries, local and national authorities become interconnected within emerging novel renewable energy sourcing communities, through which they establish trade of energy and, most importantly, models of investing and reshaping the distribution of renewable energy. The modern portfolio management of renewable energy networking is aiming toward decentralized systems of trade, where the consumer becomes a producer (prosumer) within the network, itself managed by users. Excess energy produced in the micro-grid nets within the over-arching national and transnational energy grid should be accounted for and managed with blockchain technology for financial and structural security. The decentralization of the energy market requires the establishment of strict norms that will regulate the market and taxation of profits arising. The extensive literature review on blockchain in the energy sector reflects a very pragmatic and narrow approach to the topic, although it is evident that the distribution of energy within the blockchain would enable economic development through reducing cost and ensuring more secure energy trade. Blockchain technology embeds the related digital codes, in which information will be visible to all, but also secured from hacking and duplicating. However, there are challenges to this paradigm, not least the energy consumption of the extensive nodal mesh required to perform the necessary protocols. This paper aims to provide an overview of the application of blockchain technology and the need for the development of the regulatory system and of potential solutions to the challenges posed. By undertaking an energy consumption analysis of blockchain implementation from first electronic principles, which has not been constructed before in the literature, this paper’s conclusion stresses the future demand for reducing energy consumption and considers the latest findings in the quantum coupling of light signals as a potential for solving the enormous ledger duplication structure problem.

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“…The PoW consensus mechanism, and also redundancy in operation and traffic are the two main reasons for the high energy consumption of digital currency mining. The total energy consumption of PoW-based Bitcoin is at least three orders of magnitude higher than that of the highest-consuming proof of stake (PoS) system [45][46][47]. Besides, energy consumption due to redundant operations and network traffic has caused the system to store the complete ledger on all nodes in the network, which is another challenge.…”

Section: The Gap Aims and Objectives Of The Papermentioning

confidence: 99%

An optimization strategy for enhancing energy consumption performance in digital currency miner's building

Akbarnavasi

Ledari

Ghadertootoonchi

2023

Energy Conversion and Econom

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Cryptocurrencies, as a way of extraction, are categorized into two main groups of non‐mineable and mineable. Bitcoin (BTC), the most famous mineable digital currency, utilizes the Proof of Work (PoW) algorithm for maintaining network solidarity. Its mining process is done by devices known as application specific integrated circuits (ASICs), which consume electricity and turn it into heat. They shall operate within an accepted temperature range of around 25°C; otherwise, they will face an efficiency drop; consequently, all mining sites require a proper cooling system. This study aims to investigate the problem of high energy consumption for cooling in digital currency mining sites and to present a solution for that via optimizing the capacity and operation of the chiller and ice thermal storage system (ITS). The results show the utilization of the ITS system reduces the operational costs by 10%, and the ITS system provides 1320 kWh of cooling energy during peak hours. Finally, the sensitivity analysis results considering the impact of the electricity tariff on the size and operation of the system have confirmed that with an increase in peak time tariff, the role of the ITS system in cost reduction increases.

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An analysis of energy consumption and carbon footprints of cryptocurrencies and possible solutions

Cited by 41 publications

References 42 publications

Expediting financial inclusion in Tanzania using FinTech: the perspective of diffusion of innovation theory

Expediting financial inclusion in Tanzania using FinTech: the perspective of diffusion of innovation theory

Regulatory Paradigm and Challenge for Blockchain Integration of Decentralized Systems: Example—Renewable Energy Grids

An optimization strategy for enhancing energy consumption performance in digital currency miner's building

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