The environmental effects of cryptocurrencies

Abstract

This chapter discusses the environmental aspects of cryptocurrency markets and as to how their
\nrapid growth can influence the environment and through which channels this process manifests.
\nWhile it is not popular discussion among investors, we find that environmental issues can be of
\ninterest by wider society, students, policy makers and stakeholders of FinTech companies. Environmentalism has a long history, and controversy around this subject is remains quite substantial,
\nthus to not make our discussion over-complicated, in this chapter we will focus on the area where to
\ndate, we possess the most thorough data and evidence through which we can build the case, namely
\nelectricity consumption associated with the mining of cryptocurrencies. The total carbon footprint
\nof the industry is now estimated to have surpassed that of many large industrial nations. This
\nchapter investigates the multiple knock-on effects and consequential behaviour of this rapid growth
\nin energy usage, such as an increase in global temperature, the growth of mining companies who
\nhave targeted third world infrastructures, and the complete shutdown of the internet as we know
\nit. Saying that, we encourage investors not to ignore these environmentalism matters, since we also
\nshow that electricity consumption is proven to be one of the commonly used variable in valuation
\nof mineable cryptocurrencies and identification of their fair value, which affect investments returns
\nand should be considered in their trading strategies.

Topics & Concepts