I have a new BTC research paper online today: 100 important questions about Bitcoin's energy use & ESG impacts. Long 🧵below. While in review, I welcome comments from environmentalists, BTC industry people, and investors at the preprint website.
The goal of the paper is to provide a first step in helping to shape a Bitcoin - ESG research agenda. A systematic approach to research could most quickly provide a base of credible evidence needed for decision-making by investors, regulators, policy-makers.
Knowledge gaps & misunderstanding now create confusion. Bitcoin's potential as part of the solution to carbon emissions is not recognized. Today’s IEA report, for example, doesn’t even mention Bitcoin in 522 pages:
How did I write this paper? I used a modified horizon scanning approach with long-form Bitcoiner podcast interviews as the info source. I then screened, sorted, and edited possible questions, binning them into 13 themes outlined below.
Theme 1: BTC energy use – the big picture. Individual questions here revolve around sorting out the net impact of Bitcoin mining and adoption on energy use and carbon emissions. This is more complicated than some simplistic analyses acknowledge.
Theme 2: Mitigating methane emissions. Research is needed to quantify rapidly-growing anecdotal evidence that Bitcoin mining can mitigate waste methane from oil wells, landfills, and agriculture
Theme 3: Electricity grid transition. Questions in this theme center on grid risk reduction and the potential for accelerated renewable energy infrastructure build-out when Bitcoin is incorporated into the grid.
Theme 4: Bitcoin mining – site choices and costs. Questions here relate to understanding how energy price and other factors affect BTC miners migration and site choices, and the implications on carbon emissions.
Theme 5: Bitcoin security. Can and does BTC use ‘too much’ energy? That depends on whether there are substitute products (e.g., altcoins, CBDCs) that could provide similar services as BTC can. For some use cases, ESG benefits may only be feasible given BTC's security.
Theme 6: Retail, institutional, and national adoption. Questions in this theme center on the determinants and effects of BTC adoption at multiple levels, and how adoption affects energy use and ESG impacts.
Theme 7: Governance. Many tools can be used to align and achieve societal goals, whatever those may be. Questions in this theme focus on Bitcoin's potential impact on governance and of governance on BTC mining and adoption
Theme 8: Values and beliefs. Does Bitcoin adoption alter time preferences, and how do people with different values embrace or shun Bitcoin? People act on threats & opportunities, but different people frame issues differently - decision-makers need to understand how.
Theme 9: Inflation and discount rate. High discount rates discourage climate mitigation investments: benefits in the far future don't much matter. If Bitcoin reduces inflation, adoption could make sense for both conservatives after fiscal prudence & progressives after mitigation
Theme 10: Adaptive capacity. Bitcoin may impact household, community, or national resilience in many ways. Increasing adaptive capacity at multiple levels may act an insurance over the long-term, helping control the adverse human impacts of climate change.
Theme 11: Narratives. The ESG and Bitcoin spaces are full of contested narratives. It is important to be able to sort them out, understand factors and incentives driving narratives, and ensure they are considered by decision-makers facing dueling worldviews
Theme 12: Knowledge creation and communication. Credible evidence about Bitcoin’s impacts needs to be created, synthesized, and communicated. The boundaries of what is accepted as credible knowledge may be disputed (ie, why isn't mining industry input used in economists' models?)
Theme 13: Social impacts. As technology advances and wealth increases, Bitcoin has potential higher-level social impacts, many of which are currently only documented anecdotally. Spillover effects are hard to quantify w/o detailed research on attribution
Bitcoin's net energy use & ESG factors need to be taken seriously in environmental policy analyses. Emerging real-world experience hints that Bitcoin could have a net positive impact for multiple ESG factors. Quality cross-disciplinary research is needed to sort that out.
Advancing BTC research will involve: doing primary research; synthesizing results across fields; & communicating new knowledge to decision-makers and the public. This will take time, money, people, & getting Bitcoin integrated in the international environmental research agenda
The obvious next step moving forward would be to create a new cross-disciplinary and -sectoral working group to refine and prioritize this initial list of 100 questions. I'd be happy to hear from anyone interested in this!
About the author. I am an environmental economist and policy researcher who left academia in early-2019. In my last academic position, I was a full prof and endowed chair of sustainable ocean governance in Sweden. You can check out my research pubs at:
this twitter thread.