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Can Bitcoin Mining Increase Renewable Electricity Capacity?

Author

Listed:
  • August Bruno
  • Paige Weber
  • Andrew J. Yates

Abstract

Proponents of Bitcoin argue that demand for electricity from Bitcoin miners can lead to an increase in renewable electricity capacity. We rigorously evaluate this claim by estimating a Bitcoin electricity demand curve and include this demand curve in a long-run model of the Texas electricity market. We find that while Bitcoin mining can indeed increase renewable capacity, it also increases carbon emissions. When Bitcoin miners provide grid management services in the form of demand response, their emissions impact is largely mitigated.

Suggested Citation

  • August Bruno & Paige Weber & Andrew J. Yates, 2022. "Can Bitcoin Mining Increase Renewable Electricity Capacity?," CESifo Working Paper Series 9973, CESifo.
    • Handle: RePEc:ces:ceswps:_9973
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9973.pdf
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    References listed on IDEAS

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    1. Jesús Fernández‐Villaverde, 2018. "Cryptocurrencies: A Crash Course in Digital Monetary Economics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(4), pages 514-526, December.
    2. Julien Prat & Benjamin Walter, 2021. "An Equilibrium Model of the Market for Bitcoin Mining," Journal of Political Economy, University of Chicago Press, vol. 129(8), pages 2415-2452.
    3. Lin William Cong & Zhiguo He & Jiasun Li & Wei Jiang, 2021. "Decentralized Mining in Centralized Pools [Concentrating on the fall of the labor share]," The Review of Financial Studies, Society for Financial Studies, vol. 34(3), pages 1191-1235.
    4. Bruno Biais & Christophe Bisière & Matthieu Bouvard & Catherine Casamatta, 2019. "The Blockchain Folk Theorem," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1662-1715.
    5. Gautam Gowrisankaran & Stanley S. Reynolds & Mario Samano, 2016. "Intermittency and the Value of Renewable Energy," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1187-1234.
    6. Hanna Halaburda & Guillaume Haeringer & Joshua Gans & Neil Gandal, 2022. "The Microeconomics of Cryptocurrencies," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 971-1013, September.
    7. Hanna Halaburda & David Yermack, 2023. "Bitcoin Mining Meets Wall Street: A Study of Publicly Traded Crypto Mining Companies," NBER Working Papers 30923, National Bureau of Economic Research, Inc.
    8. Stephen P. Holland & Erin T. Mansur & Andrew J. Yates, 2022. "Decarbonization and Electrification in the Long Run," NBER Working Papers 30082, National Bureau of Economic Research, Inc.
    9. Baur, Dirk G. & Hong, KiHoon & Lee, Adrian D., 2018. "Bitcoin: Medium of exchange or speculative assets?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 54(C), pages 177-189.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Agnese, Pablo & Rios, Francisco, 2024. "Spillover effects of energy transition metals in Chile," Energy Economics, Elsevier, vol. 134(C).
    2. Bajra, Ujkan Q. & Ermir Rogova, & Avdiaj, Sefer, 2024. "Cryptocurrency blockchain and its carbon footprint: Anticipating future challenges," Technology in Society, Elsevier, vol. 77(C).
    3. Hebous, Shafik & Vernon-Lin, Nate, 2024. "Cryptocarbon: How much is the corrective tax?," Energy Economics, Elsevier, vol. 138(C).
    4. Ernest Barceló & Katarina Dimić-Mišić & Monir Imani & Vesna Spasojević Brkić & Michael Hummel & Patrick Gane, 2023. "Regulatory Paradigm and Challenge for Blockchain Integration of Decentralized Systems: Example—Renewable Energy Grids," Sustainability, MDPI, vol. 15(3), pages 1-27, January.

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    More about this item

    Keywords

    cryptocurrency; electricity markets; renewable energy; Bitcoin;
    All these keywords.

    JEL classification:

    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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