Time-varying Granger causality in Bitcoin mining: Uncovering shifting links to environment, sustainability, and profitability

Abstract

This paper investigates the Granger causality relationship in Bitcoin mining from environmental, sustainable, and miner’s financial perspectives for the period of February 2017 to January 2025. Using a time-varying Granger causality approach of Shi et al. (2018,2020), we explore how the hashrate, a measure of computational power in the Bitcoin mining process, affects energy consumption, electronic waste, and miners’ revenues. Our findings reveal that an increase in hashrate leads to a significant rise in energy use and e-waste and affects miners’ revenues. In addition, we show that mining revenue Granger causes the hashrate, suggesting economic incentives drive the network security through the hashrate. These results offer new insights for investors, policymakers, and environmental economists. • A time-varying Granger causality approach is adopted. • Higher computational power directly increases electricity demand and electronic waste. • The intensity of competition, as measured by hashrate, has a significant impact on mining profitability. • Higher mining revenues incentivise the use of greater hash power.