Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions /
Papp, Anna.
Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions / Anna Papp, Douglas Almond, Shuang Zhang. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31745 . - Working Paper Series (National Bureau of Economic Research) no. w31745. .
September 2023.
Environmental externalities from cryptomining may be large, but have not been linked causally to mining incentives. We exploit daily variation in Bitcoin price as a natural experiment for an 86 megawatt coal-fired power plant with on-site cryptomining. We find that carbon emissions respond swiftly to mining incentives, with price elasticities of 0.69-0.71 in the short-run and 0.33-0.40 in the longer run. A $1 increase in Bitcoin price leads to $3.11-$6.79 in external damages from carbon emissions alone, well exceeding cryptomining's value added (using a $190 social cost of carbon, but ignoring increased local air pollution). As cryptomining requires ever more computing power to mine a given number of blocks, our study highlights both the revitalization of US fossil assets and the potential value of financial industry accounting standards that incorporate cryptomining externalities.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
General
Government Policy
Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions / Anna Papp, Douglas Almond, Shuang Zhang. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31745 . - Working Paper Series (National Bureau of Economic Research) no. w31745. .
September 2023.
Environmental externalities from cryptomining may be large, but have not been linked causally to mining incentives. We exploit daily variation in Bitcoin price as a natural experiment for an 86 megawatt coal-fired power plant with on-site cryptomining. We find that carbon emissions respond swiftly to mining incentives, with price elasticities of 0.69-0.71 in the short-run and 0.33-0.40 in the longer run. A $1 increase in Bitcoin price leads to $3.11-$6.79 in external damages from carbon emissions alone, well exceeding cryptomining's value added (using a $190 social cost of carbon, but ignoring increased local air pollution). As cryptomining requires ever more computing power to mine a given number of blocks, our study highlights both the revitalization of US fossil assets and the potential value of financial industry accounting standards that incorporate cryptomining externalities.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
General
Government Policy