Implications of cryptocurrency energy usage on climate change

Zhang, Dongna, Chen, Xihui Haviour, Lau, Chi Keung Marco and Xu, Bing (2023) Implications of cryptocurrency energy usage on climate change. Technological Forecasting and Social Change, 187. p. 122219. ISSN 0040-1625

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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.

Item Type: Article
Uncontrolled Keywords: Climate change, Technological innovation, Cryptocurrency, Bitcoin, CO2 emissions
Subjects: N100 Business studies
N300 Finance
Department: Faculties > Business and Law > Newcastle Business School
Depositing User: John Coen
Date Deposited: 13 Dec 2022 10:35
Last Modified: 13 Dec 2022 10:45

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