Are energy consumption and carbon emission caused by Bitcoin? A novel time-varying technique

Probing the role of Bitcoin in energy consumption and carbon emission is crucial to the U.S. to make carbon neutrality come true by 2050. This analysis innovatively uses the time-varying parameter-stochastic volatility-vector auto-regression system to identify the dynamic interrelation among Bitcoin price, carbon emission and energy consumption. The outcomes underline that Bitcoin price exerts positive influences on carbon emission and energy consumption most of the time, indicating that high Bitcoin price might increase energy demand to mine Bitcoin, and this process also emits carbon dioxide. However, the negative effects, mainly during periods with an immature Bitcoin market and the past two years, suggest that seasonal factors, economic situation and extreme climate also influence energy consumption and carbon emission. Additionally, there is an intermediate effect of Bitcoin price on carbon emission through energy consumption. Then, we conclude that energy consumption and carbon emissions in the U.S. are caused by Bitcoin most of the time but only sometimes. Under the energy and climate crises, these conclusions offer meaningful implications for the U.S. to realise carbon neutrality by dealing with massive energy consumption and carbon emission from the Bitcoin market. & COPY; 2023 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.