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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...

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Autores principales: Ghosh, Bikramaditya, Bouri, Elie
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2022
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.
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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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