Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach
The environmental impact of cryptocurrencies has attracted increasing scrutiny, largely due to the high energy consumption of blockchain networks. However, empirical research on the causal relationship between cryptocurrency trading activity and carbon emissions remains scarce. This study addresses...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-12-01
|
| Series: | Sustainable Futures |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666188825005593 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1849430577514545152 |
|---|---|
| author | Abdulkadri Toyin Alabi Abdullahi Omogbolahan Ishola |
| author_facet | Abdulkadri Toyin Alabi Abdullahi Omogbolahan Ishola |
| author_sort | Abdulkadri Toyin Alabi |
| collection | DOAJ |
| description | The environmental impact of cryptocurrencies has attracted increasing scrutiny, largely due to the high energy consumption of blockchain networks. However, empirical research on the causal relationship between cryptocurrency trading activity and carbon emissions remains scarce. This study addresses this gap by analysing the dynamic interplay between cryptocurrency trading and CO₂ emissions for Bitcoin, Ethereum, and Binance Coin, using monthly data from January 2015 to September 2024. Employing the Toda-Yamamoto augmented Granger causality approach, we apply logarithmic transformations to ensure data stationarity and address integration and endogeneity concerns. Our results reveal a bidirectional Granger causality between Bitcoin trading and CO₂ emissions, suggesting a feedback loop between market activity and environmental impact. For Ethereum, we find a similar albeit weaker bidirectional causality from trading to emissions, while no significant causal link is detected for Binance Coin, likely reflecting its more energy-efficient consensus mechanism. These findings highlight the disproportionate environmental burden of proof-of-work cryptocurrencies and underscore the need for targeted regulatory responses. We recommend the adoption of carbon-sensitive crypto policies, such as mandatory energy usage disclosures and incentives for transitioning to sustainable consensus mechanisms. This study advances the environmental finance literature by providing robust empirical evidence on the links between digital asset markets and carbon emissions. |
| format | Article |
| id | doaj-art-00efc75bb49c4bea8f82ef6cf4599eb5 |
| institution | Kabale University |
| issn | 2666-1888 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Sustainable Futures |
| spelling | doaj-art-00efc75bb49c4bea8f82ef6cf4599eb52025-08-20T03:27:57ZengElsevierSustainable Futures2666-18882025-12-011010099510.1016/j.sftr.2025.100995Revisiting the carbon footprint of cryptocurrency trading: A granger causality approachAbdulkadri Toyin Alabi0Abdullahi Omogbolahan Ishola1School of Business and Governance, Kwara State University, Malete, NigeriaEssex Business School, University of Essex, Colchester, UK; Postgraduate School, Anglia Ruskin University London, Import Building, 2 Clove Cresent, London E14, UK; Corresponding author.The environmental impact of cryptocurrencies has attracted increasing scrutiny, largely due to the high energy consumption of blockchain networks. However, empirical research on the causal relationship between cryptocurrency trading activity and carbon emissions remains scarce. This study addresses this gap by analysing the dynamic interplay between cryptocurrency trading and CO₂ emissions for Bitcoin, Ethereum, and Binance Coin, using monthly data from January 2015 to September 2024. Employing the Toda-Yamamoto augmented Granger causality approach, we apply logarithmic transformations to ensure data stationarity and address integration and endogeneity concerns. Our results reveal a bidirectional Granger causality between Bitcoin trading and CO₂ emissions, suggesting a feedback loop between market activity and environmental impact. For Ethereum, we find a similar albeit weaker bidirectional causality from trading to emissions, while no significant causal link is detected for Binance Coin, likely reflecting its more energy-efficient consensus mechanism. These findings highlight the disproportionate environmental burden of proof-of-work cryptocurrencies and underscore the need for targeted regulatory responses. We recommend the adoption of carbon-sensitive crypto policies, such as mandatory energy usage disclosures and incentives for transitioning to sustainable consensus mechanisms. This study advances the environmental finance literature by providing robust empirical evidence on the links between digital asset markets and carbon emissions.http://www.sciencedirect.com/science/article/pii/S2666188825005593CryptocurrencyCarbon emissionsBitcoinEthereumBNBEnvironmental sustainability |
| spellingShingle | Abdulkadri Toyin Alabi Abdullahi Omogbolahan Ishola Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach Sustainable Futures Cryptocurrency Carbon emissions Bitcoin Ethereum BNB Environmental sustainability |
| title | Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach |
| title_full | Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach |
| title_fullStr | Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach |
| title_full_unstemmed | Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach |
| title_short | Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach |
| title_sort | revisiting the carbon footprint of cryptocurrency trading a granger causality approach |
| topic | Cryptocurrency Carbon emissions Bitcoin Ethereum BNB Environmental sustainability |
| url | http://www.sciencedirect.com/science/article/pii/S2666188825005593 |
| work_keys_str_mv | AT abdulkadritoyinalabi revisitingthecarbonfootprintofcryptocurrencytradingagrangercausalityapproach AT abdullahiomogbolahanishola revisitingthecarbonfootprintofcryptocurrencytradingagrangercausalityapproach |