The Economic and Environmental Impact of Bitcoin

Badea, Liana; Mungiu-Pupăzan, Mariana Claudia

doi:10.1109/access.2021.3068636

Cited by 74 publications

(40 citation statements)

References 63 publications

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“…, 2020). As for the carbon footprint of Bitcoin transactions, each Bitcoin transaction can contribute 619 Kwt to the carbon footprint, which is equal to 350,000 bank card transactions or the energy consumption of an average USA family over 20.92 days (Badea and Mungiu-Pupazan, 2021). China has a huge cryptocurrency market, and Jiang et al.…”

Section: Introductionmentioning

confidence: 99%

“…In October 2019, it was estimated that the energy consumption of Bitcoin mining was significantly more than the energy consumption of Austria (Malfuzi et al, 2020). As for the carbon footprint of Bitcoin transactions, each Bitcoin transaction can contribute 619 Kwt to the carbon footprint, which is equal to 350,000 bank card transactions or the energy consumption of an average USA family over 20.92 days (Badea and Mungiu-Pupazan, 2021). China has a huge cryptocurrency market, and Jiang et al (2020) estimated that without any policy regulations, the annual energy consumption of Bitcoin in China is expected to peak in 2024 at 296.59 Twh.…”

Section: Introductionmentioning

confidence: 99%

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An index of cryptocurrency environmental attention (ICEA)

Wang

Lucey

Vigne

et al. 2022

CFRI

102

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Purpose(1) A concern often expressed in relation to cryptocurrencies is the environmental impact associated with increasing energy consumption and mining pollution. Controversy remains regarding how environmental attention and public concerns adversely affect cryptocurrency prices. Therefore, the paper aims to introduce the index of cryptocurrency environmental attention (ICEA), which aims to capture the relative extent of media discussions surrounding the environmental impact of cryptocurrencies. (2) The impacts of cryptocurrency environmental attention on long-term macro-financial markets and economic development remain part of undeveloped research fields. Based on these factors, the paper will further examine the effects of the ICEA on financial markets or economic developments.Design/methodology/approach(1) The paper introduces a new index to capture cryptocurrency environmental attention in terms of the cryptocurrency response to major related events through gathering a large amount of news stories around cryptocurrency environmental concerns – i.e. >778.2 million news items from the LexisNexis News & Business database, which can be considered as Big Data – and analysing that rich dataset using variety of quantitative techniques. (2) The vector error correction model (VECM) and structural VECM (SVECM) [impulse response function (IRF), forecast error variance decomposition (FEVD) and historical decomposition (HD)] are useful for characterising the dynamic relationships between ICEA and aggregate economic activities.Findings(1) The paper has developed a new measure of attention to sustainability concerns of cryptocurrency markets' growth, ICEA. (2) ICEA has a significantly positive relationship with the UCRY indices, volatility index (VIX), Brent crude oil (BCO) and Bitcoin. (3) ICEA has a significantly negative relationship with the global economic policy uncertainty (GlobalEPU) and global temperature uncertainty (GTU). Moreover, ICEA has a significantly positive relationship with the industrial production (IP) in the short term, whilst having a significantly negative relationship in the long term. (4) The HD of the ICEA displays higher linkages between environmental attention, Bitcoin and UCRY indices around key events that significantly change the prices of digital assets.Research limitations/implicationsThe ICEA is significant in the analysis of whether cryptocurrency markets are sustainable regarding energy consumption requirements and negative contributions to climate change. Understanding of the broader impacts of cryptocurrency environmental concerns on cryptocurrency market volatility, uncertainty and environmental sustainability should be considered and developed. Moreover, the paper aims to point out future research and policy legislation directions. Notably, the paper poses the question of how cryptocurrency can be made more sustainable and environmentally friendly and how governments' cryptocurrency policies can address the cryptocurrency markets.Practical implications(1) The paper develops a cryptocurrency environmental attention index based on news coverage that captures the extent to which environmental sustainability concerns are discussed in conjunction with cryptocurrencies. (2) The paper empirically investigates the impacts of cryptocurrency environmental attention on other financial or economic variables [cryptocurrency uncertainty (UCRY) indices, Bitcoin, VIX, GlobalEPU, BCO, GTU index and the Organisation for Economic Co-operation and Development IP index]. (3) The paper provides insights into making the most effective use of online databases in the development of new indices for financial research.Social implicationsWhilst blockchain technology has a number of useful implications and has great potential to transform several industries, issues of high-energy consumption and CO2 pollution regarding cryptocurrency have become some of the main areas of criticism, raising questions about the sustainability of cryptocurrencies. These results are essential for both policy-makers and for academics, since the results highlight an urgent need for research addressing the key issues, such as the growth of carbon produced in the creation of this new digital currency. The results also are important for investors concerned with the ethical implications and environmental impacts of their investment choices.Originality/value(1) The paper provides an efficient new proxy for cryptocurrency and robust empirical evidence for future research concerning the impact of environmental issues on cryptocurrency markets. (2) The study successfully links cryptocurrency environmental attention to the financial markets, economic developments and other volatility and uncertainty measures, which has certain novel implications for the cryptocurrency literature. (3) The empirical findings of the paper offer useful and up-to-date insights for investors, guiding policy-makers, regulators and media, enabling the ICEA to evolve into a barometer in the cryptocurrency era and play a role in, for example, environmental policy development and investment portfolio optimisation.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

An index of cryptocurrency environmental attention (ICEA)

Wang

Lucey

Vigne

et al. 2022

CFRI

102

View full text Add to dashboard Cite

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“…It is noteworthy that miners are mainly concerned with the amount of profit obtained than energy efficiency. Hence, as more people driven by profit enter the blockchain industry, energy consumption is estimated to increase considerably (Badea and Mungiu-Pupӑzan 2021 ).…”

Section: Literature Reviewmentioning

confidence: 99%

Analyzing asymmetric effects of cryptocurrency demand on environmental sustainability

Erdoğan

Ahmed

Sarkodıe

2022

Environ Sci Pollut Res

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When bitcoin (BTC), the first pioneering cryptocurrency was released in 2009, it was considered an apolitical currency. Besides, the possible effect of BTC and other cryptocurrencies on either financial markets or transactions has been widely discussed. However, the environmental effects of cryptocurrency demand have been ignored. Here, this study examines the nexus between cryptocurrencies and environmental degradation by employing standard and asymmetric causality methods. The Toda-Yamamoto and bootstrap-augmented Toda-Yamamoto test results reveal Bitcoin and Ethereum (ETH) excluding Ripple (XRP) have causal effects on environmental degradation. The Fourier-augmented Toda-Yamamoto test results show causal effects running from Bitcoin and Ripple to environmental degradation, whereas no causal effect runs from Ethereum to environmental degradation. The asymmetric causality shows causal effects from the positive shock of Bitcoin demand, negative shocks of Ripple and Ethereum demands to positive shocks of environmental degradation. Further discussions and policy implications are provided in the relevant sections of this study.

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“…To this aim, we introduce MiningVis, an exploratory visual analytics tool that focuses on Bitcoin mining activities and actors. Not only mining is crucial to the stability and future of most cryptocurrencies and all the people who heavily invested in those currencies, but it also has implications on society, economy, and the environment [2,21,31]. As such, mining is an important aspect of cryptocurrencies to study.…”

Section: Introductionmentioning

confidence: 99%

MiningVis: Visual Analytics of the Bitcoin Mining Economy

Tovanich

Soulié

Isenberg

2022

IEEE Trans. Visual. Comput. Graphics

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Fig. 1. A screenshot of the MiningVis tool. (V1) The time filter view allows analysts to select a time interval of interest. (V2) The mining distribution view shows the evolution of the mining pools as a ribbon chart. (V3) The mining pool details view shows mining power and pool characteristics for each mining pool in a compound chart. (V4) The Bitcoin statistics view shows Bitcoin network statistics as a list of area charts (see Fig. 4). (V5) The Bitcoin news view displays a swarm plot of the news distribution over time. (V6) The cross pooling view represents the total reward of cross pooling miners in mining pools at the time interval on a chord diagram.

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The Economic and Environmental Impact of Bitcoin

Cited by 74 publications

References 63 publications

An index of cryptocurrency environmental attention (ICEA)

An index of cryptocurrency environmental attention (ICEA)

Analyzing asymmetric effects of cryptocurrency demand on environmental sustainability

MiningVis: Visual Analytics of the Bitcoin Mining Economy

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