Thread by @stefanwouldgo

A thread about a recent paper answering an important question about #Bitcoin's climate impact that I have asked myself for years but couldn't find the data for: sciencedirect.com/science/articl…

This paper is called "Bitcoin investments and climate change: A financial and carbon intensity perspective"
by Dirk G. Baur (@DirkBaur) and Josua Oll. Kudos to @thetrocro for mentioning it on twitter.

Now what was that question that it has answers to?

Everybody says investing in #Bitcoin has a negative climate impact. And according to the science we have been looking at @netposmon that seems to be true, even if
- the total impact is less than 0.1%
- we are probably overestimating it a lot
- investing in green mining can help

But what about the alternative? That is, if you invested that same money (say, $10k) in a standard stock index like the S&P500, like most people do? Wouldn't that also have an impact? How large is that impact? How does it compare to #Bitcoin? That is what this paper is all about.

The companies in the S&P together are responsible for ~3 Gt of CO2/year and have a total market cap of ~$30 trillion according to this source: spglobal.com/spdji/en/docum… Which means investing $10k in the S&P500 makes you responsible for about 1t of CO2 each year.

How does that compare to #Bitcoin? Check out this table from the paper. It "shows whether $10,000 invested in Bitcoin is more, less, or equally carbon intensive than $10,000 invested in the S&P500."

Of course, this depends heavily on our estimation of #Bitcoin's impact, as well as the market cap, which changes relatively quickly. If we look at netpositive.money/calculator, our (upper bound) estimation for 2021 is 46.4 Mt. Today's market cap is ~$712b.

So the table says that according to this data, putting your money in #Bitcoin will only have 50-60% of the climate impact of putting it into the S&P500! And the source paper above even lists fossil-free indexes, which are in the same ballpark of 50% of the S&P!

In short, according to the best scientific data available to us, owning #Bitcoin is way better for the climate than owning the S&P500, and about as bad as owning a broad-based fossil-free index!

Of course, you could choose to invest only in companies that have an even better CO2 footprint. But that's stock picking. DYOR.

However, as a #Bitcoin investor, you could completely undo your impact by co-investing in green mining. Follow @thetroco and @resistancemoney for more on this wonderful idea. And of course, follow @netposmon for keeping up with the science and the best ways of greening #Bitcoin!

By the way, the paper is really worth reading, and has much more to say about investment strategies and carbon risk. Unfortunately, it isn't freely available AFAIK. Maybe the authors can help?

Thank you for your attention!

P.S.: This summary is probably optimistic because of its timing. We appear to be at the end of a bull market, where the market cap is still relatively high, but mining hasn't caught up. So the numbers might become a bit worse for #Bitcoin in the short term. Still interesting.