The Energy Footprint of Blockchain Consensus Mechanisms Beyond Proof-of-Work

Platt, Moritz; Sedlmeir, Johannes; Platt, Daniel; Tasca, Paolo; Xu, Jiahua; Vadgama, Nikhil; Ibañez, Juan Ignacio

doi:10.48550/arxiv.2109.03667

Cited by 11 publications

(14 citation statements)

References 18 publications

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“…That is, ESGconscious investors tend to invest more often in crypto-assets even though in the general crypto-asset class there are also cryptocurrencies with adverse environmental effects for example due to high energy consumption. The existence of alternative less energy-intensive consensus mechanisms, e.g., the PoS is much less energy intensive than PoW, and the usage of renewable energy sources for mining may explain our results (Platt et al, 2021). We find less support for a causal relationship between nonpecuniary effects related to social and governance preferences in Austrian individual investor portfolio exposure to crypto-assets.…”

Section: Resultscontrasting

confidence: 63%

Environmental-Social-Governance Preferences and Investments in Crypto-Assets

Ciaian¹,

Cupák²,

Fessler³

et al. 2022

Preprint

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Individuals invest in Environmental-Social-Governance (ESG)-assets not only because of (higher) expected returns but also driven by ethical and social considerations. Less is known about ESG-conscious investor subjective beliefs about crypto-assets and how do these compare to traditional assets. Controversies surrounding the ESG footprint of certain crypto-asset classes -mainly on grounds of their energy-intensive crypto mining -offer a potentially informative object of inquiry. Leveraging a unique representative household finance survey for the Austrian population, we examine whether investors' ESG preferences can explain cross-sectional differences in individual portfolio exposure to cryptoassets. We find a strong association between investors' ESG preferences and the crypto-investment exposure. The ESG-conscious investor attention is higher for crypto-assets compared to traditional asset classes such as bonds and shares.

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Section: Resultscontrasting

confidence: 63%

Environmental-Social-Governance Preferences and Investments in Crypto-Assets

Ciaian¹,

Cupák²,

Fessler³

et al. 2022

Preprint

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“…First, there is very limited existing research on the extent or determinants of cryptocurrency's growing energy consumption problem, precluding any conclusive scientific confirmation about its contribution to climate change (de Vries, 2020;Gallersd€ orfer et al, 2020). Moreover, the few extant studies concerning the relationship between cryptocurrencies and environmental issues focus on how cryptocurrencies contribute to environmental issues (Stoll et al, 2019;Corbet et al, 2021;Platt et al, 2021), with few studies comprehensively investigating inverse interactions. Second, no existing studies report on how environmental attention on cryptocurrencies can shock the cryptocurrency markets and not even the literature examining which financial or economic variables are susceptible to shocks transmitted by cryptocurrency environmental attention.…”

Section: Introductionmentioning

confidence: 99%

An index of cryptocurrency environmental attention (ICEA)

Wang

Lucey

Vigne

et al. 2022

CFRI

114

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Purpose(1) A concern often expressed in relation to cryptocurrencies is the environmental impact associated with increasing energy consumption and mining pollution. Controversy remains regarding how environmental attention and public concerns adversely affect cryptocurrency prices. Therefore, the paper aims to introduce the index of cryptocurrency environmental attention (ICEA), which aims to capture the relative extent of media discussions surrounding the environmental impact of cryptocurrencies. (2) The impacts of cryptocurrency environmental attention on long-term macro-financial markets and economic development remain part of undeveloped research fields. Based on these factors, the paper will further examine the effects of the ICEA on financial markets or economic developments.Design/methodology/approach(1) The paper introduces a new index to capture cryptocurrency environmental attention in terms of the cryptocurrency response to major related events through gathering a large amount of news stories around cryptocurrency environmental concerns – i.e. >778.2 million news items from the LexisNexis News & Business database, which can be considered as Big Data – and analysing that rich dataset using variety of quantitative techniques. (2) The vector error correction model (VECM) and structural VECM (SVECM) [impulse response function (IRF), forecast error variance decomposition (FEVD) and historical decomposition (HD)] are useful for characterising the dynamic relationships between ICEA and aggregate economic activities.Findings(1) The paper has developed a new measure of attention to sustainability concerns of cryptocurrency markets' growth, ICEA. (2) ICEA has a significantly positive relationship with the UCRY indices, volatility index (VIX), Brent crude oil (BCO) and Bitcoin. (3) ICEA has a significantly negative relationship with the global economic policy uncertainty (GlobalEPU) and global temperature uncertainty (GTU). Moreover, ICEA has a significantly positive relationship with the industrial production (IP) in the short term, whilst having a significantly negative relationship in the long term. (4) The HD of the ICEA displays higher linkages between environmental attention, Bitcoin and UCRY indices around key events that significantly change the prices of digital assets.Research limitations/implicationsThe ICEA is significant in the analysis of whether cryptocurrency markets are sustainable regarding energy consumption requirements and negative contributions to climate change. Understanding of the broader impacts of cryptocurrency environmental concerns on cryptocurrency market volatility, uncertainty and environmental sustainability should be considered and developed. Moreover, the paper aims to point out future research and policy legislation directions. Notably, the paper poses the question of how cryptocurrency can be made more sustainable and environmentally friendly and how governments' cryptocurrency policies can address the cryptocurrency markets.Practical implications(1) The paper develops a cryptocurrency environmental attention index based on news coverage that captures the extent to which environmental sustainability concerns are discussed in conjunction with cryptocurrencies. (2) The paper empirically investigates the impacts of cryptocurrency environmental attention on other financial or economic variables [cryptocurrency uncertainty (UCRY) indices, Bitcoin, VIX, GlobalEPU, BCO, GTU index and the Organisation for Economic Co-operation and Development IP index]. (3) The paper provides insights into making the most effective use of online databases in the development of new indices for financial research.Social implicationsWhilst blockchain technology has a number of useful implications and has great potential to transform several industries, issues of high-energy consumption and CO2 pollution regarding cryptocurrency have become some of the main areas of criticism, raising questions about the sustainability of cryptocurrencies. These results are essential for both policy-makers and for academics, since the results highlight an urgent need for research addressing the key issues, such as the growth of carbon produced in the creation of this new digital currency. The results also are important for investors concerned with the ethical implications and environmental impacts of their investment choices.Originality/value(1) The paper provides an efficient new proxy for cryptocurrency and robust empirical evidence for future research concerning the impact of environmental issues on cryptocurrency markets. (2) The study successfully links cryptocurrency environmental attention to the financial markets, economic developments and other volatility and uncertainty measures, which has certain novel implications for the cryptocurrency literature. (3) The empirical findings of the paper offer useful and up-to-date insights for investors, guiding policy-makers, regulators and media, enabling the ICEA to evolve into a barometer in the cryptocurrency era and play a role in, for example, environmental policy development and investment portfolio optimisation.

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“…Referring to prior research [40], the energy consumed by beyond-PoW blockchains, such as Polkadot [41], Cardano [42], or Hedera Hashgraph [43], is within a range that is similar to the energy consumed in our experimental setup.…”

Section: Discussionmentioning

confidence: 84%

Analysis of Distributed Ledger Technologies for Industrial Manufacturing

Nguyen¹,

Broering²,

Pizzol³

et al. 2022

Preprint

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n recent years, industrial manufacturing has undergone massive technological changes that embrace digitalization and automation towards the vision of intelligent manufacturing plants. With the aim of maximizing efficiency and profitability in production, an important goal is to enable flexible manufacturing, both, for the customer (desiring more individualized products) and for the manufacturer (to adjust to market demands). Manufacturing-as-a-service can support this through manufacturing plants that are used by different tenants who utilize the machines in the plant, which are offered by different providers.To enable such pay-per-use business models, Distributed Ledger Technology (DLT) is a viable option to establish decentralized trust and traceability. Thus, in this paper, we study potential DLT technologies for an efficient and intelligent integration of DLT-based solutions in manufacturing environments. We propose a general framework to adapt DLT in manufacturing, then we introduce the use case of shared manufacturing, which we utilize to study the communication and computation efficiency of selected DLTs in resource-constrained wireless IoT networks.n recent years, industrial manufacturing has undergone massive technological changes that embrace digitalization and automation towards the vision of intelligent manufacturing plants. With the aim of maximizing efficiency and profitability in production, an important goal is to enable flexible manufacturing, both, for the customer (desiring more individualized products) and for the manufacturer (to adjust to market demands). Manufacturing-as-aservice can support this through manufacturing plants that are used by different tenants who utilize the machines in the plant, which are offered by different providers. To enable such pay-per-use business models, Distributed Ledger Technology (DLT) is a viable option to establish decentralized trust and traceability. Thus, in this paper, we study potential DLT technologies for an efficient and intelligent integration of DLT-based solutions in manufacturing environments. We propose a general framework to adapt DLT in manufacturing, then we introduce the use case of shared manufacturing, which we

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The Energy Footprint of Blockchain Consensus Mechanisms Beyond Proof-of-Work

Cited by 11 publications

References 18 publications

Environmental-Social-Governance Preferences and Investments in Crypto-Assets

Environmental-Social-Governance Preferences and Investments in Crypto-Assets

An index of cryptocurrency environmental attention (ICEA)

Analysis of Distributed Ledger Technologies for Industrial Manufacturing

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