Green gold or carbon beast? Assessing the environmental implications of cryptocurrency trading on clean water management and carbon emission SDGs

Abstract

This study addresses the ongoing debate concerning the environmental implications of cryptocurrencies. Specifically, it investigates the impact of Bitcoin trading volume on water and sanitation (Sustainable Development Goal (SDG) 6) and climate action (SDG 13). The research employs Ordinary Least Squares (OLS) panel data analysis to examine these relationships using a sample of 32 countries with available Bitcoin trading volume data from 2013 to 2020. The findings indicate that Bitcoin trading significantly and positively impacts progress towards SDG 6, suggesting potential benefits for water and sanitation initiatives. However, the study reveals a significant negative impact of higher Bitcoin trading volume on increased carbon emissions, underscoring the environmental costs associated with cryptocurrency activities. Similar impacts are observed for gold reserves, as their mining necessitates substantial energy consumption. These results highlight the need to regulate cryptocurrency trading and promote voluntary sustainable practices, particularly given the disparities between developed and emerging markets based on their governance frameworks. Additionally, the study considers the disparities between countries based on technology exports and economic policy uncertainty as influential determinants. The study's results emphasize the importance of proactive measures to ensure the responsible and sustainable use of cryptocurrencies. While cryptocurrencies offer significant economic returns, their early adoption stage necessitates further investigation into environmentally friendly approaches. Potential strategies include directing financial returns from cryptocurrencies towards alternative energy projects and supporting other environmental SDGs, thereby fostering a positive impact on the overall ecosystem. The study's implications extend to policymakers, regulators, and stakeholders, advocating for comprehensive and collaborative efforts to integrate sustainability into the rapidly evolving cryptocurrency market. This integration is crucial to ensure that the economic benefits of cryptocurrencies do not come at the cost of our environment.