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Bitcoin Mining and Its Environmental Effects

Year 2019, Volume: 33 Issue: 1, 91 - 106, 07.02.2019

Abstract

 Bitcoin, with its market value among cryptocurrencies and being the biggest in terms of its processing volume, carries great potential in terms of low cost, speedy processing and lowlevel risk while also bringing with it important global-level change and transformation. On the other hand, the fact that cryptocurrencies and Bitcoin specifically are new, of unclear legal status, and carry the risk of being involved in illegal activity, there is the potential for their use as an extremely volatile and speculative investment tool and have environmental effects. This study examines Bitcoin mining and blockchain technology and investigates the high amounts of energy consumed by Bitcoin and its environmental effects. It is argued that the energy consumed as a result of increased Bitcoin mining will have environmental and social consequences, such as global warming and climate change.

References

  • Bitcoin ATM Industry Statistics / Charts, https://coinatmradar.com/ (accessed 3 Jan 2018); “Coinmap”, http://coinmap.org (accessed 3 Jan 2018).
  • Baek C. and Elbeck M. (2015) “Bitcoins As an Investment or Speculative Vehicle? A First Look”, Applied Economics Letters, Vol. 22, Iss. 1
  • Baur D. G. Hong K. and Lee A. D. (2016) Bitcoin: Currency or Asset?”, Melbourne Business School, 2016 Financial Institutions, Regulation & Corporate Governance (FIRCG) Conference, 22 February.
  • Bouria E. Molnárb P. Azzic G. Roubaudd and D. Hagforse L. I. (2016) “On the Hedge and Safe Haven Properties of Bitcoin: Is it Really More Than a Diversifier?”, Finance Research Letters, Volume 20, pp.192-198.
  • Ciaian P., Rajcaniova M. and Kancs d. (2016) “The Economics of BitCoin Price Formation”, Applied Economics, 48(19): 1799-1815.
  • Collomb A. and Sok K. (2016) “Blockchain / Distributed Ledger Technology (DLT): What Impact on the Financial Sector?”, Digiworld Economic Journal, No.103: 93-110
  • Dahan M. and Casey M. (2016) “Blockchain Technology: Redefining Trust for a Global, Digital Economy”, The World Bank, 16 June 2016.
  • Digiconomist (2017a) Bitcoin Energy Consumption Index, viewed: 4 January 2018, https://digiconomist.net/bitcoin-energy-consumption
  • Digiconomist (2017b) A Deep Dive in a Real-World Bitcoin Mine, viewed 25 September 2017, https://digiconomist.net/deep-dive-real-world-bitcoin-mineDorfman J. (2017) Bitcoin Is An Asset, Not A Currency, Forbes, 17 May 2017.
  • Dyhrberg A. H. (2015) “Hedging Capabilities of Bitcoin. Is it the Virtual Gold?”, Finance Research Letters, Volume 16, (October 2015), pp. 139-144;
  • EIA (2016a) “Energy And Air Pollution”, World Energy Outlook Special Report 2016, viewed: 11 January 2018,
  • https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlookSpecialReport2016EnergyandAirPollution.pdf
  • EIA (2016b) “Energy”, Climate Change Environment https://www.iea.org/publications/freepublications/publication/ECCE2016.pdf
  • EIA (2017) “Coal and the Environment”, viewed 15 January 2018, https://www.eia.gov/energyexplained/index.cfm?page=coal_environment
  • Glaser F. Zimmermann K. Haferkorn M. Weber M. C. Siering M. (2014) “Bitcoin-Asset or Currency? Revealing Users' Hidden Intentions. Revealing Users' Hidden Intentions”, Twenty Second European Conference on Information Systems.
  • Hayes A. S. (2015) “A Cost of Production Model for Bitcoin”, University of Wisconsin - Madison - Department of Sociology; The New School - Department of Economics, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580904
  • Hileman G. and Rauchs M. (2017) “Global Cryptocurrency Benchmarkıng Study”, University of Cambridge, Cambridge Centre for Alternative Finance.
  • Holthaus E. (2017) Bitcoin Could Cost Us Our Clean-Energy Future, viewed: 4 January 2018, http://grist.org/article/bitcoin-could-cost-us-our-clean-energy-future/
  • Hype (2017) Citigroup by 2022 Bitcoin Mining Can Become Unprofitable”, viewed 10 November 2017, https://hype.codes/citigroup-2022-bitcoin-mining-can-become-unprofitable
  • Irfan U. (2017) Bitcoin’s Price Spike is Driving An Extraordinary Surge in Energy Use, https://www.vox.com/energy-and-environment/2017/12/2/16724786/bitcoin-mining-energy-electricity
  • Kristoufek L. (2015) “What Are the Main Drivers of The Bitcoin Price? Evidence from Wavelet Coherence Analysis.” PloS one, Vol.10, Num. 4.
  • Marian O. (2013) “Are Cryptocurrencies Super Tax Havens?”, 112 Michigan Law Review First Impressions, 38.
  • Mishra S. P. (2017) “Bitcoin Mining and Its Cost”, University of Texas at Dallas - Naveen Jindal School of Management.
  • Nakamoto S. (2008) “Bitcoin: A Peer-to-Peer Electronic Cash System”, https://bitcoin.org/bitcoin.pdf (accessed 2 Jan 2018).
  • Naughton J. (2017) The Trouble With Bitcoin And Big Data Is The Huge Energy Bill, viewed: 9 January 2018,
  • https://www.theguardian.com/commentisfree/2017/nov/26/trouble-with-bitcoin-big-data-huge-energy-bill
  • O’Dwyer J. K. and Malone D. (2014) “Bitcoin Mining and its Energy Footprint”, Hamilton Institute, National University of Ireland Maynooth SSC 2014 / CIICT 2014, Limerick, June 26–27.
  • Piscini E. Hyman G. and Henry W. (2017), Blockchain: Trust Economy in Tech Trends 2017,
  • Powercompare (2017) “Bitcoin Mining Now Consuming More Electricity than 159 Countries Including Ireland & Most Countries In Africa”.
  • The Economist (2015) The Promise of the Blockchain: The Trust Machine. 31 October 2015.
  • Vigna P. and Casey MJ. (2016) The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order. Picador.
  • Walt E. V. Gao G. Biesheuvel T, and Warren H. (2017) Coal Is Fueling Bitcoin’s Meteoric Rise, Bloomberg, 15 December 2017.

BITCOIN MINING AND ITS ENVIRONMENTAL EFFECTS

Year 2019, Volume: 33 Issue: 1, 91 - 106, 07.02.2019

Abstract

 Kripto paralar içerisinde sahip olduğu piyasa değeri ve işlem hacmiyle en büyük para birimi konumundaki Bitcoin düşük maliyet, hızlı işlem ve taşıdığı az risk boyutuyla büyük bir potansiyeli taşımakta ve küresel ölçekte önemli bir değişim ve dönüşümü de beraberinde getirmektedir. Öte taraftan, Bitcoin özelinde kripto paraların henüz yeni, yasal statülerinin belirsiz ve yasa dışı işlemler için kullanılma riskleri ile birlikte aşırı volatil, spekülatif bir yatırım aracı olarak kullanılmaları ve çevresel etkileri bulunmaktadır. Bu çalışmada, Bitcoin madenciliği ve blockchain teknolojisi incelenmekte, Bitcoin’in tükettiği yüksek miktardaki enerji ve bunun çevresel boyutları irdelenmektedir. Bitcoin madenciliğinin artış göstermesi sonucu tüketilen enerjinin küresel ısınma ve iklim değişikliği gibi çevresel ve sosyal sonuçlarının olacağı vurgulanmaktadır.

References

  • Bitcoin ATM Industry Statistics / Charts, https://coinatmradar.com/ (accessed 3 Jan 2018); “Coinmap”, http://coinmap.org (accessed 3 Jan 2018).
  • Baek C. and Elbeck M. (2015) “Bitcoins As an Investment or Speculative Vehicle? A First Look”, Applied Economics Letters, Vol. 22, Iss. 1
  • Baur D. G. Hong K. and Lee A. D. (2016) Bitcoin: Currency or Asset?”, Melbourne Business School, 2016 Financial Institutions, Regulation & Corporate Governance (FIRCG) Conference, 22 February.
  • Bouria E. Molnárb P. Azzic G. Roubaudd and D. Hagforse L. I. (2016) “On the Hedge and Safe Haven Properties of Bitcoin: Is it Really More Than a Diversifier?”, Finance Research Letters, Volume 20, pp.192-198.
  • Ciaian P., Rajcaniova M. and Kancs d. (2016) “The Economics of BitCoin Price Formation”, Applied Economics, 48(19): 1799-1815.
  • Collomb A. and Sok K. (2016) “Blockchain / Distributed Ledger Technology (DLT): What Impact on the Financial Sector?”, Digiworld Economic Journal, No.103: 93-110
  • Dahan M. and Casey M. (2016) “Blockchain Technology: Redefining Trust for a Global, Digital Economy”, The World Bank, 16 June 2016.
  • Digiconomist (2017a) Bitcoin Energy Consumption Index, viewed: 4 January 2018, https://digiconomist.net/bitcoin-energy-consumption
  • Digiconomist (2017b) A Deep Dive in a Real-World Bitcoin Mine, viewed 25 September 2017, https://digiconomist.net/deep-dive-real-world-bitcoin-mineDorfman J. (2017) Bitcoin Is An Asset, Not A Currency, Forbes, 17 May 2017.
  • Dyhrberg A. H. (2015) “Hedging Capabilities of Bitcoin. Is it the Virtual Gold?”, Finance Research Letters, Volume 16, (October 2015), pp. 139-144;
  • EIA (2016a) “Energy And Air Pollution”, World Energy Outlook Special Report 2016, viewed: 11 January 2018,
  • https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlookSpecialReport2016EnergyandAirPollution.pdf
  • EIA (2016b) “Energy”, Climate Change Environment https://www.iea.org/publications/freepublications/publication/ECCE2016.pdf
  • EIA (2017) “Coal and the Environment”, viewed 15 January 2018, https://www.eia.gov/energyexplained/index.cfm?page=coal_environment
  • Glaser F. Zimmermann K. Haferkorn M. Weber M. C. Siering M. (2014) “Bitcoin-Asset or Currency? Revealing Users' Hidden Intentions. Revealing Users' Hidden Intentions”, Twenty Second European Conference on Information Systems.
  • Hayes A. S. (2015) “A Cost of Production Model for Bitcoin”, University of Wisconsin - Madison - Department of Sociology; The New School - Department of Economics, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580904
  • Hileman G. and Rauchs M. (2017) “Global Cryptocurrency Benchmarkıng Study”, University of Cambridge, Cambridge Centre for Alternative Finance.
  • Holthaus E. (2017) Bitcoin Could Cost Us Our Clean-Energy Future, viewed: 4 January 2018, http://grist.org/article/bitcoin-could-cost-us-our-clean-energy-future/
  • Hype (2017) Citigroup by 2022 Bitcoin Mining Can Become Unprofitable”, viewed 10 November 2017, https://hype.codes/citigroup-2022-bitcoin-mining-can-become-unprofitable
  • Irfan U. (2017) Bitcoin’s Price Spike is Driving An Extraordinary Surge in Energy Use, https://www.vox.com/energy-and-environment/2017/12/2/16724786/bitcoin-mining-energy-electricity
  • Kristoufek L. (2015) “What Are the Main Drivers of The Bitcoin Price? Evidence from Wavelet Coherence Analysis.” PloS one, Vol.10, Num. 4.
  • Marian O. (2013) “Are Cryptocurrencies Super Tax Havens?”, 112 Michigan Law Review First Impressions, 38.
  • Mishra S. P. (2017) “Bitcoin Mining and Its Cost”, University of Texas at Dallas - Naveen Jindal School of Management.
  • Nakamoto S. (2008) “Bitcoin: A Peer-to-Peer Electronic Cash System”, https://bitcoin.org/bitcoin.pdf (accessed 2 Jan 2018).
  • Naughton J. (2017) The Trouble With Bitcoin And Big Data Is The Huge Energy Bill, viewed: 9 January 2018,
  • https://www.theguardian.com/commentisfree/2017/nov/26/trouble-with-bitcoin-big-data-huge-energy-bill
  • O’Dwyer J. K. and Malone D. (2014) “Bitcoin Mining and its Energy Footprint”, Hamilton Institute, National University of Ireland Maynooth SSC 2014 / CIICT 2014, Limerick, June 26–27.
  • Piscini E. Hyman G. and Henry W. (2017), Blockchain: Trust Economy in Tech Trends 2017,
  • Powercompare (2017) “Bitcoin Mining Now Consuming More Electricity than 159 Countries Including Ireland & Most Countries In Africa”.
  • The Economist (2015) The Promise of the Blockchain: The Trust Machine. 31 October 2015.
  • Vigna P. and Casey MJ. (2016) The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order. Picador.
  • Walt E. V. Gao G. Biesheuvel T, and Warren H. (2017) Coal Is Fueling Bitcoin’s Meteoric Rise, Bloomberg, 15 December 2017.
There are 32 citations in total.

Details

Primary Language English
Journal Section Makaleler
Authors

Şerif Dilek

Yunus Furuncu 0000-0001-7488-365X

Publication Date February 7, 2019
Published in Issue Year 2019 Volume: 33 Issue: 1

Cite

APA Dilek, Ş., & Furuncu, Y. (2019). Bitcoin Mining and Its Environmental Effects. Atatürk Üniversitesi İktisadi Ve İdari Bilimler Dergisi, 33(1), 91-106.

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