Bitcoin investments and climate change: A financial and carbon intensity perspective

Dirk G. Baur and Josua Oll

Finance Research Letters, 2022, vol. 47, issue PA

Abstract: Climate-related criticism of Bitcoin is primarily based on the network's absolute carbon emissions, without considering its market value. Taking a relative emission perspective and utilizing the mean–variance portfolio optimization framework, we study the financial and carbon-related implications of Bitcoin investments. The results of our in-sample analysis show that adding Bitcoin to a diversified equity portfolio can both enhance the risk–return relationship of the portfolio and reduce the portfolio's aggregate carbon emissions. This finding persists under various assumptions regarding Bitcoin prices, carbon emission estimates, and carbon prices.

Keywords: Cryptocurrencies; Bitcoin; Carbon emissions; Climate change; Carbon intensity; Mean–variance analysis (search for similar items in EconPapers)
JEL-codes: G1 G11 Q54 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005262

DOI: 10.1016/j.frl.2021.102575

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