Alabi, Abdulkadri Toyin and Ishola, Abdullahi Omogbolahan (2025) Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach. Sustainable Futures, 10. p. 100995. DOI https://doi.org/10.1016/j.sftr.2025.100995
Alabi, Abdulkadri Toyin and Ishola, Abdullahi Omogbolahan (2025) Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach. Sustainable Futures, 10. p. 100995. DOI https://doi.org/10.1016/j.sftr.2025.100995
Alabi, Abdulkadri Toyin and Ishola, Abdullahi Omogbolahan (2025) Revisiting the carbon footprint of cryptocurrency trading: A granger causality approach. Sustainable Futures, 10. p. 100995. DOI https://doi.org/10.1016/j.sftr.2025.100995
Abstract
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.
Item Type: | Article |
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Uncontrolled Keywords: | Cryptocurrency; Carbon emissions; Bitcoin; Ethereum; BNB; Environmental sustainability |
Subjects: | Z Bibliography. Library Science. Information Resources > ZZ OA Fund (articles) |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School Faculty of Social Sciences > Essex Business School > Essex Accounting Centre |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 01 Aug 2025 13:03 |
Last Modified: | 01 Aug 2025 13:03 |
URI: | http://repository.essex.ac.uk/id/eprint/41363 |
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