Lessons from crypto assets for the design of energy efficient digital currencies

Agur, Itai; Lavayssière, Xavier; Bauer, Germán Villegas; Deodoro, Jose; Peria, Soledad Martinez; Sandri, Damiano; Tourpe, Hervé

doi:10.1016/j.ecolecon.2023.107888

Cited by 5 publications

(2 citation statements)

References 32 publications

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“…For transparency and replicability, the input data was stored on the GitHub platform. 1 These categories consist of 15 fundamental variables that are known in the previous day of forecasting ( h − 24 ) and are used by the ML algorithms to provide the forecast of the Bitcoin close price for the next day ( C h BTC ). Therefore, the initial dataset is composed of: Open-High-Low prices (…”

Section: Stage 1-input Data Pre-processingmentioning

confidence: 99%

“…The problem of energy consumption generated by cryptocurrency transactions is also of interest from the perspective of central banks that are looking for technical solutions regarding future payment systems. The banking authorities are committed to promoting the principles of digital development, which is why reducing the energy consumption generated by payment systems is a challenge and future digital currencies can use certain technical elements specific to cryptocurrencies Derbali, et al [14]; Agur et al [1].…”

Section: Introductionmentioning

confidence: 99%

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Insights into Bitcoin and energy nexus. A Bitcoin price prediction in bull and bear markets using a complex meta model and SQL analytical functions

Bâra,

Oprea,

Panait

2024

Appl Intell

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Cryptocurrencies are in the center of attention of investors, public authorities and researchers, but the interest has shifted from purely financial aspects regarding the way of trading, lack of regulation and supervision of transactions, volatility, correlation with other assets to aspects related to sustainability taking in account the high energy consumption generated by the mining process and the impact on environmental pollution. Bitcoin was chosen for the research considering the dominance that this financial asset has on the cryptocurrency market and its position as alpha currency.The article focuses on the relationship between Bitcoin transactions and energy consumption, for period 1st January 2019—31st of May 2022, this interval having significant price movements. The authors made a prediction of the Bitcoin price using a complex meta-model and SQL analytical functions. The analysis is based on 15 fundamental variables in order to forecast the price: Bitcoin data (prices and volume), electricity price and traded quantity on day-ahead market (DAM), gas price and traded quantity on DAM, inflation in EU, EU-ETS emissions certificates and oil prices. The study reveals the importance of the relationship Bitcoin—energy—carbon emissions, elements that capture the impact of the mining process on the environment from the perspective of energy consumption. Investors on the Bitcoin market must be aware not only of the importance of financial aspects on the price of cryptocurrencies (inflation, demand, offer), but also of other elements related to the evolution of energy prices (electricity, oil, gas, renewable energy) and the evolution of emissions certificates prices. Considering the promotion of the principles of sustainable development on the capital market, portfolio investors have become increasingly attentive to the social and environmental performance of financial assets. This study aims to make financial market players aware of the non-financial implications of their transactions. In addition, the energy transition and the reconfiguration of the energy mix are elements of impact on the cryptocurrency market through the technical levers involved in the mining process.

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Section: Stage 1-input Data Pre-processingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Insights into Bitcoin and energy nexus. A Bitcoin price prediction in bull and bear markets using a complex meta model and SQL analytical functions

Bâra,

Oprea,

Panait

2024

Appl Intell

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Energy Demand Unawareness and the Popularity of Bitcoin: Evidence from Nigeria

Platt,

Ojeka,

Drăgnoiu

et al. 2023

Oxford Open Energy

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Decentralized cryptocurrency networks, notably those with high energy demand, have faced significant criticism and subsequent regulatory scrutiny. Despite these concerns, policy interventions targeting cryptocurrency operations in the pursuit of sustainability have largely been ineffective. Some were abandoned for fear of jeopardizing innovation, whereas others failed due to the highly globalized nature of blockchain systems. In search of a more effective angle for energy policy measures, this study adopts a consumer-centric perspective, examining the sentiments of Nigerian cryptocurrency users ($n=158$) toward Bitcoin’s sustainability, a representative cryptocurrency known for its high electricity demand. Three main findings emerged: 1) Even among those self-identifying as highly knowledgeable, most considerably underestimated Bitcoin’s electricity consumption. 2) Participants with a more accurate understanding of Bitcoin’s energy demand were more inclined to support sustainability measures. 3) Most of this supportive cohort viewed private entities as the primary stakeholders for implementing such measures. Given these findings, we suggest that consumer education should be at the forefront of policy initiatives aimed at cryptocurrency sustainability.

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Can Central Bank Digital Currencies be green and sustainable?

Alonso

2023

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<abstract> <p>Within digital finance, CBDCs are booming. As there are currently four operational CBDCs and as many as ninety-four central banks, jurisdictions or currency areas are testing or investigating the launch of a retail CBDC. The study was based on a sample of 34 countries or currency areas, which were classified into three groups. This research aimed to answer the following research questions: 1. Can CBDCs be considered green and sustainable? 2. How can we determine whether a CBDC is green and sustainable? 3. Which countries are closest to having green CBDCs? It has been calculated the total and the percentage of CBDCs that could be considered green or sustainable according to each country or currency area; in this model, it has been considered one monetary unit issued in a green/sustainable CBDC format for each point that a country obtains in this model that is adjusted according to four variables: Electricity prices for households and for businesses, renewable electricity production and CO<sub>2</sub> emissions. The countries that could launch a higher percentage of green/sustainable CBDCs in circulation would be the countries in the Eurozone and the United Kingdom, with these countries exceeding 70%. This was followed by Sweden (60%), Australia (58%) and the Bahamas (close to 54%). Only the Bahamas has its CBDC already launched and operational. Jamaica is also in the top ten and has its CBDC up and running. Japan closes the top 10 with just over 51%. Those countries with cleaner sources of power generation will be able to keep their CBDCs operating more sustainably. The environmental impact, however, will vary depending on the design choices of a CBDC and the country where it operates, according to the variables of this model.</p> </abstract>

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Lessons from crypto assets for the design of energy efficient digital currencies

Cited by 5 publications

References 32 publications

Insights into Bitcoin and energy nexus. A Bitcoin price prediction in bull and bear markets using a complex meta model and SQL analytical functions

Insights into Bitcoin and energy nexus. A Bitcoin price prediction in bull and bear markets using a complex meta model and SQL analytical functions

Energy Demand Unawareness and the Popularity of Bitcoin: Evidence from Nigeria

Can Central Bank Digital Currencies be green and sustainable?

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