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Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications
The Bitcoin mining process is energy intensive, which can hamper the much-desired ecological balance. Given that the persistence of high levels of energy consumption of Bitcoin could have permanent policy implications, we examine the presence of long memory in the daily data of the Bitcoin Energy Co...
Autores principales: | , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
MDPI
2022
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9141479/ https://www.ncbi.nlm.nih.gov/pubmed/35626532 http://dx.doi.org/10.3390/e24050647 |
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author | Ghosh, Bikramaditya Bouri, Elie |
author_facet | Ghosh, Bikramaditya Bouri, Elie |
author_sort | Ghosh, Bikramaditya |
collection | PubMed |
description | The Bitcoin mining process is energy intensive, which can hamper the much-desired ecological balance. Given that the persistence of high levels of energy consumption of Bitcoin could have permanent policy implications, we examine the presence of long memory in the daily data of the Bitcoin Energy Consumption Index (BECI) (BECI upper bound, BECI lower bound, and BECI average) covering the period 25 February 2017 to 25 January 2022. Employing fractionally integrated GARCH (FIGARCH) and multifractal detrended fluctuation analysis (MFDFA) models to estimate the order of fractional integrating parameter and compute the Hurst exponent, which measures long memory, this study shows that distant series observations are strongly autocorrelated and long memory exists in most cases, although mean-reversion is observed at the first difference of the data series. Such evidence for the profound presence of long memory suggests the suitability of applying permanent policies regarding the use of alternate energy for mining; otherwise, transitory policy would quickly become obsolete. We also suggest the replacement of ‘proof-of-work’ with ‘proof-of-space’ or ‘proof-of-stake’, although with a trade-off (possible security breach) to reduce the carbon footprint, the implementation of direct tax on mining volume, or the mandatory use of carbon credits to restrict the environmental damage. |
format | Online Article Text |
id | pubmed-9141479 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2022 |
publisher | MDPI |
record_format | MEDLINE/PubMed |
spelling | pubmed-91414792022-05-28 Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications Ghosh, Bikramaditya Bouri, Elie Entropy (Basel) Article The Bitcoin mining process is energy intensive, which can hamper the much-desired ecological balance. Given that the persistence of high levels of energy consumption of Bitcoin could have permanent policy implications, we examine the presence of long memory in the daily data of the Bitcoin Energy Consumption Index (BECI) (BECI upper bound, BECI lower bound, and BECI average) covering the period 25 February 2017 to 25 January 2022. Employing fractionally integrated GARCH (FIGARCH) and multifractal detrended fluctuation analysis (MFDFA) models to estimate the order of fractional integrating parameter and compute the Hurst exponent, which measures long memory, this study shows that distant series observations are strongly autocorrelated and long memory exists in most cases, although mean-reversion is observed at the first difference of the data series. Such evidence for the profound presence of long memory suggests the suitability of applying permanent policies regarding the use of alternate energy for mining; otherwise, transitory policy would quickly become obsolete. We also suggest the replacement of ‘proof-of-work’ with ‘proof-of-space’ or ‘proof-of-stake’, although with a trade-off (possible security breach) to reduce the carbon footprint, the implementation of direct tax on mining volume, or the mandatory use of carbon credits to restrict the environmental damage. MDPI 2022-05-05 /pmc/articles/PMC9141479/ /pubmed/35626532 http://dx.doi.org/10.3390/e24050647 Text en © 2022 by the authors. https://creativecommons.org/licenses/by/4.0/Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). |
spellingShingle | Article Ghosh, Bikramaditya Bouri, Elie Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title | Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title_full | Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title_fullStr | Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title_full_unstemmed | Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title_short | Is Bitcoin’s Carbon Footprint Persistent? Multifractal Evidence and Policy Implications |
title_sort | is bitcoin’s carbon footprint persistent? multifractal evidence and policy implications |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9141479/ https://www.ncbi.nlm.nih.gov/pubmed/35626532 http://dx.doi.org/10.3390/e24050647 |
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