Bitcoin users consume the same amount of energy in a year as Belgium consumes the same amount of energy in a year as Belgium, Thailand, or any medium-sized country. The process of mining bitcoin involves decrypting complex algorithms that require intensive computer processing. The heat generated by this processing is the reason that cryptocurrencies produce so much emissions. Additionally, the “slow and energy intensive” process required to verify transactions contributes to the emissions. One of the PhD students operating out of the Trinity Business School is Boru Ren, who is looking at both “dirty” cryptocurrencies that cause emissions and cryptos that are perceived as “cleaner” and seeing whether this environmental, social and governance (ESG) dimension impacts how cryptos are treated as financial instruments by market participants. Yizhe Wang, another PhD student, is using massive textual databases to analyse the sentiment towards bitcoin’s environmental impact within global media. The research also looks into whether certain events, such as global temperature anomalies or spikes in the price of bitcoin, are correlated with increased public discussion about the environmental impact of these cryptocurrency. ‘He is also starting work looking at zero carbon issues and Chinese carbon issues,’ Lucey noted. Another area that one of Lucey’s students, Suwan Long, is investigating is the role that online commentary on Twitter, Reddit and other social media has on the value of cryptocurrencies using natural language processing algorithms, including ones she is developing herself, to examine massive textual databases. ‘The question is whether the sentiment leads the market or the market leads the sentiment,’ Lucey explained. ‘And how this has somewhat changed with the advent of more institutional investors coming into that space.’ Though cryptocurrencies and digital currencies are often used interchangeably, they are not the same thing. However, both are definitely going to feature in the future of finance, according to Lucey, who points to the importance of researching these factors. ‘These cryptos are not going away. Digital central bank currencies are coming, there is no doubt about that.’
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