Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions / Anna Papp, Douglas Almond, Shuang Zhang.

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Papp, Anna

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w31745.Publication details: Cambridge, Mass. National Bureau of Economic Research 2023.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: 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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w31745 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w31742 Do Consumers Acquire Information Optimally? Experimental Evidence from Energy Efficiency /	nber w31743 Obsolescence Rents: Teamsters, Truckers, and Impending Innovations /	nber w31744 A Perturbational Approach for Approximating Heterogeneous Agent Models /	nber w31745 Bitcoin and Carbon Dioxide Emissions: Evidence from Daily Production Decisions /	nber w31746 The Long-Term Effects of Income for At-Risk Infants: Evidence from Supplemental Security Income /	nber w31747 Algorithmic Recommendations and Human Discretion /	nber w31748 Secrets in Asset Purchases: Estimating the Unofficial Incomes of Officials /	Next

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.