Relationship between Crypto Currencies and Climate Change

Since the emergence of cryptocurrencies in 2008 to the present day, the volatility of bitcoin prices has generated a surge of interest among investors, as it provides an opportunity to profit from excessive price increases. Industry observers refer to it as a “growing energy problem” as bitcoin mining consumes more energy than most countries in recent times. This research study examines the causality relationship between the cryptocurrencies involved in Bitcoin mining and the amount of carbon emissions that lead to climate change. In the research study, the total energy consumption estimates and the predicted trend global CO2 emission values of Bitcoin and Ethereum cryptocurrencies are discussed. The data used in the research study are the daily time-series data over the period 05.20.2017 - 04.08.2022. The analysis was conducted by performing the Toda-Yamamoto causality test. A bilateral causal relationship was found between Bitcoin and CO2 emissions; whereas no significant connection existed between Ethereum and CO2 emissions. In conclusion, the high energy consumption of cryptocurrencies and the resulting CO2 emissions pose significant environmental challenges, bringing the sustainability of cryptocurrencies into question. In this context, efforts to increase the share of renewable energy in energy consumption of cryptocurrencies need to be accelerated. Additionally, this study will contribute to the development of theoretical foundations in this field.