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Book part
Publication date: 18 February 2022

Serhat Yüksel, Hasan Dinçer, Çağatay Çağlayan, Gülsüm Sena Uluer and Anton Lisin

It is predicted that the bitcoin system will enter many areas of our lives in the future. Although it has many benefits, the most criticized issue of this system is excessive…

Abstract

It is predicted that the bitcoin system will enter many areas of our lives in the future. Although it has many benefits, the most criticized issue of this system is excessive energy consumption. Since an excessive amount of energy is used in this process, it is vital that the preferred energy is environmentally friendly. For example, mining bitcoin with fossil fuels is likely to release a significant amount of carbon gas into the atmosphere. This will cause serious environmental problems. Therefore, great attention should be paid to the type of energy that will be used in bitcoin mining. In this study, it was stated that it would be beneficial to prefer nuclear energy in bitcoin mining. As a result of the use of nuclear energy, no carbon gas is released into the atmosphere. This will help reduce environmental pollution to a significant extent. Another dimension of nuclear energy being preferred in bitcoin mining is that the energy produced is continuous. The main reason for this is that nuclear energy is not affected by climatic conditions and temperature differences. Thanks to the preference of nuclear energy in bitcoin mining, it will be possible to contribute to the uninterrupted progress of this process.

Details

Multidimensional Strategic Outlook on Global Competitive Energy Economics and Finance
Type: Book
ISBN: 978-1-80117-899-0

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Book part
Publication date: 13 April 2023

Ayyuce Memis Karatas, Emin Karatas, Ayhan Kapusuzoglu and Nildag Basak Ceylan

This chapter presents an overview of the Bitcoin and its impacts on the environment and economics from the viewpoint of carrying out a systematic analysis of the literature…

Abstract

This chapter presents an overview of the Bitcoin and its impacts on the environment and economics from the viewpoint of carrying out a systematic analysis of the literature related to the environmental and economic effect of digital currency. It is aimed to summarize and critically examine the points of view regarding Bitcoin mining, considering its effects on global warming and the social environment, employing peer-reviewed data associated through literatures. As a result, this study provides the chance to analyze the set of knowledge regarding the effects of the Bitcoin mining procedure on the ecosystem in regard to energy use and CO2 emissions regarding unit root tests and causality test based on nonlinear models. The results show that there exists a nonlinear causal relationship between statistics on Bitcoin mining and the CO2 emissions. The results also imply that Bitcoin remains to be a tool utilized in the economic environment for a range of objectives despite high energy consumption and some negative environmental impact within the scope of renewable energy; hence, authorities would take Bitcoin mining impacts into account to reduce CO2 emissions.

Abstract

Details

The Emerald Handbook of Blockchain for Business
Type: Book
ISBN: 978-1-83982-198-1

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Article
Publication date: 2 June 2023

Nishant Sapra and Imlak Shaikh

While Blockchain can serve us, Bitcoin threatens our survival. If Bitcoin is assumed to be a country, it will rank 38th globally for energy consumption. With 90.2 metric million…

Abstract

Purpose

While Blockchain can serve us, Bitcoin threatens our survival. If Bitcoin is assumed to be a country, it will rank 38th globally for energy consumption. With 90.2 metric million tonnes of carbon dioxide, Bitcoin mining and trading has emerged as an environmental threat. The current study investigates how the trading-specific variables, the prices of Crypto Index and Ethereum, affect bitcoin-based energy consumption. Also, the role of mining-specific variables is analyzed.

Design/methodology/approach

The study uses monthly data from various sources collected from December 2018 to January 2023. The authors used the Autoregressive Distributed Lag (ARDL) Model to determine the short- and long-term relationships between variables. This study uses the Theory of Green Marketing and the Theory of Cross Elasticity of Demand as a theoretical lens.

Findings

The findings show that escalating crypto market index and Ethereum prices with a one-month lag increases bitcoin-specific electricity consumption and carbon emissions. Green investors may shift to cryptocurrencies based on consensus other than of Proof-of-Work. Ethereum behaves like a substitute for Bitcoin, reflected by the long-term positive relationship between Bitcoin's energy consumption and Ethereum prices.

Originality/value

The study analyses how the crypto market index and Ethereum price affect bitcoin-based energy use. The relationships identified are substantiated by the literature to provide suggestions to green investors and policymakers to mitigate the harmful impact of Bitcoin's colossal energy consumption on the natural environment.

Details

Managerial Finance, vol. 49 no. 11
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 17 January 2023

Sylvia Gottschalk

Cryptoassets have recently attracted the attention of national and international financial regulators. Since the mid-2010s blockchains have increasingly been adapted to automate…

Abstract

Cryptoassets have recently attracted the attention of national and international financial regulators. Since the mid-2010s blockchains have increasingly been adapted to automate and replace many aspects of financial intermediation, and by 2015 Ethereum had created the smart contract language that underpins the digitization of real assets as asset-backed tokens (ABTs). Those were initially issued by FinTech companies, but more recently banks active on international capital and financial markets, and even central banks, for example, the Bank of Thailand, have developed their own digital platforms and blockchains. A wide variety of real and financial assets underpins ABTs, viz., real-estate, art, corporate and sovereign bonds, and equity. Consequently, owing to the significant market capitalization of cryptocurrencies, the Basel Committee on Banking Supervision (BCBS) published two consultative papers delineating its approach on cryptoasset regulation. In this study, the authors analyze the mechanics of ABTs and their potential risks, relying on case studies of recent issuance of tokens in equity, real-estate, and debt markets, to highlight their main characteristics. The authors also investigate the consequences of the increasingly oligopolistic structure of blockchain mining pools and Bitcoin exchanges for the integrity and security of unregulated distributed ledgers. Finally, the authors analyze the BCBS’ regulatory proposals, and discuss the reaction of international financial institutions and cryptocurrency interest groups. The main findings are, firstly, that most ABTs are akin to asset-backed securities. Secondly, nearly all ABTs are “off-chain/on-chain,” that is, the underlying is a traditional asset that exists off-chain and is subsequently digitized. The main exception is the World Bank’s bond-i that is genuinely native to the blockchain created by the Commonwealth Bank of Australia, and has no existence outside it. Thirdly, all ABTs are issued on permissioned blockchains, where anti-money laundering/anti-terrorist funding and know-your-customer regulations are enforced. From a prudential regulatory perspective, ABTs do not appear to pose serious systemic risks to international financial markets. This may account for the often negative reactions of banks, banking associations, and cryptocurrency interest groups to the BCBS’ 2021 proposals for risk-weighted capital provisions for cryptoassets, which are viewed as excessive. Finally, we found that issuance of ABTS and other smart contracts on permissionless blockchains such as Bitcoin and Ethereum could potentially generate financial instability. A precedent involving Ethereum and The DAO in 2016 shows that (i) there is a significant accountability gap in permissionless blockchains, and (ii) the core developers of blockchains and smart contract technology, and Bitcoin mining pools, exercise an unexpectedly high- and completely unregulated-amount of power in what is supposedly a decentralized network.

Article
Publication date: 1 September 2022

Noureddine Benlagha and Wael Hemrit

The present work endeavors to explore the potential nonlinear and asymmetric effects of supply fundamental properties of Bitcoin mining process (velocity, size and stock of…

Abstract

Purpose

The present work endeavors to explore the potential nonlinear and asymmetric effects of supply fundamental properties of Bitcoin mining process (velocity, size and stock of Bitcoins, cost of production and mining revenue), DJIA, VIX, economic policy uncertainty and Google Trend on the price of Bitcoin (PB).

Design/methodology/approach

The authors apply the Nonlinear Autoregressive Distributed lag (NARDL) approach for the period from November 31, 2013 to December 30, 2020.

Findings

The asymmetric effects of inflation, the size of Bitcoin economy, reveal a positive impact on the PB in the short and long run. In the short run, Bitcoin price shows negative statistically significant sensitivity to positive (negative) changes in DJIA (VIX) index. In addition, Google Trends have an impact on Bitcoin prices indicating that the Bitcoin market is also driven by investors' sentiments. In the long run, negative policy uncertainty shocks increase the PB while in the short run, negative shocks decrease it.

Originality/value

The authors give credence to the best ways of understanding the existence of asymmetries in the link between the PB and a number of influential macro-finance variables to improve the appropriate asset allocation and portfolio management.

Details

Managerial Finance, vol. 49 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 19 March 2018

Paolo Tasca, Adam Hayes and Shaowen Liu

This paper aims to gather together the minimum units of users’ identity in the Bitcoin network (i.e. the individual Bitcoin addresses) and group them into representations of…

2490

Abstract

Purpose

This paper aims to gather together the minimum units of users’ identity in the Bitcoin network (i.e. the individual Bitcoin addresses) and group them into representations of business entities, what we call “super clusters”. While these clusters can remain largely anonymous, the authors are able to ascribe many of them to particular business categories by analyzing some of their specific transaction patterns (TPs), as observed during the period from 2009 to 2015. The authors are then able to extract and create a map of the network of payment relationships among them, and analyze transaction behavior found in each business category. They conclude by identifying three marked regimes that have evolved as the Bitcoin economy has grown and matured: from an early prototype stage; to a second growth stage populated in large part with “sin” enterprise (i.e. gambling, black markets); to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises.

Design/methodology/approach

Data mining.

Findings

Four primary business categories are identified in the Bitcoin economy: miners, gambling services, black markets and exchanges. Common patterns of transaction behavior between the business categories and their users are a “one-day” holding period for bitcoin transactions is somewhat typical. That is, a one-day effect where traders, gamblers, black market participants and miners tend to cash out on a daily basis. There seems to be a strong preference to do business within the bitcoin economy in round lot amounts, whether it is more typical of traders exchanging for fiat money, gamblers placing bets or black market goods being bought and sold. Distinct patterns of transaction behavior among the business categories and their users are flows between traders and exchanges average just around 20 BTC, and traders buy or sell on average every 11 days. Meanwhile, gamblers wager just 0.5 BTC on average, but re-bet often within the same day. Three marked regimes have evolved, as the Bitcoin economy has grown and matured: from an early prototype stage, to a second growth stage populated in large part with “sin” enterprises (i.e. gambling, black markets), to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises. This evolution of the Bitcoin economy suggests a trend toward legitimate commerce.

Originality/value

The authors propose a new theoretical framework that allows investigating and exploring the network of payment relationships in the Bitcoin economy. This study starts by gathering together the minimum units of Bitcoin identities (the individual addresses), and it goes forward in grouping them into approximations of business entities, what is called “super clusters”, by using tested techniques from the literature. A super cluster can be thought of as an approximation of a business entity in that it describes a number of individual addresses that are owned or controlled collectively by the same beneficial owner for some special economic purposes. The majority of these important clusters are initially unknown and uncategorized. The novelty of this study is given by the pure user group and the TP analyses, by means of which the authors are able to ascribe the super clusters into specific business categories and outline a map of the network of payment relationships among them.

Details

The Journal of Risk Finance, vol. 19 no. 2
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 28 February 2022

Christophe Schinckus, Canh Phuc Nguyen and Felicia Hui Ling Chong

Given the growing importance of cryptocurrencies and the technique called “SegWit” that allows to compile more transactions in a mined block, the electricity consumed per block…

Abstract

Purpose

Given the growing importance of cryptocurrencies and the technique called “SegWit” that allows to compile more transactions in a mined block, the electricity consumed per block might potentially decrease. The purpose of this study is to consider that the difficulty to mine a block might be a better indicator of the Bitcoin\Ether’s electricity consumption.

Design/methodology/approach

This study applies the vector error correction model to investigate data related to primary energy consumption and electricity production, supply and consumption for Bitcoin and Ether hashrates from 2016M1 to 2021M5.

Findings

The hashrate (difficulty of solving the cryptographic problem related to the validation of a transaction) is found to have a positive cointegration with energy and electricity consumption. Despite the launch of the Segregation Witness (SegWit) mechanism allowing blocks to handle a higher number of transactions per block, this Bitcoin and Ether growing need in electricity has significantly been increasing since October 2019.

Originality/value

The major contribution of this study is to investigate a more relevant indicator, namely, hashrate (computational difficulty to solve cryptographic enigma associated with cryptocurrencies-related transaction). The approach of this study can be justified by the fact that there exists a technical solution consisting in increasing the number of transactions per blocks so that less electricity might be required to validate a transaction.

Details

Studies in Economics and Finance, vol. 39 no. 3
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 3 April 2018

Yuki Kano and Tatsuo Nakajima

This paper aims to solve a mining work centralization problem using a gamification-based approach.

601

Abstract

Purpose

This paper aims to solve a mining work centralization problem using a gamification-based approach.

Design/methodology/approach

The authors have developed a simple blockchain application that incorporates a gamification concept into the mining work. Then, they asked some participants in an experiment to use the application for a week and gathered some insights from the responses on questionnaires.

Findings

The results show that the gamification-based approach distributed mining work among many participants by increasing their motivation to participate mining work.

Originality/value

The gamification-based approach solves a mining work centralization problem and opens a new direction for future blockchain technologies.

Details

International Journal of Pervasive Computing and Communications, vol. 14 no. 1
Type: Research Article
ISSN: 1742-7371

Keywords

Book part
Publication date: 11 November 2019

Miguel R. Olivas-Lujan

Blockchains, also known as “distributed ledger technologies” (DLT) are perhaps the emerging innovation that, in the years leading up to and including 2019, is raising the highest…

Abstract

Blockchains, also known as “distributed ledger technologies” (DLT) are perhaps the emerging innovation that, in the years leading up to and including 2019, is raising the highest expectations for HRM in the 4.0 business environment. In essence, a blockchain is a very specific type of database, with characteristics that made it the ideal application for cryptocurrencies like Bitcoin. Within the context of digital- or e-HRM, there is potential to improve human resource management (HRM) processes using blockchains for employment screening, credential and educational verification, worker contracts and payments, among others, notwithstanding questions about its efficiency vis-à-vis conventional alternatives (Maurer, 2018; Zielinski, 2018). The research questions examined in this chapter include the following: What are the main characteristics of blockchains? Will they be adopted in a widespread form, specifically by HRM departments? Constructs from Diffusion of Innovations (DOI) theory (Rogers, 2003) are used to inform the Human Resources scholarly and practitioner communities; this robust theory may help companies allocate resources (e.g., budgets, personnel, managerial time, etc.) in an evidence-informed manner. As of this writing, very few blockchain applications, such as credential verification and incident reporting, seem to hold a strong potential for adoption.

Details

HRM 4.0 For Human-Centered Organizations
Type: Book
ISBN: 978-1-78973-535-2

Keywords

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