Abstract
The energy consumption of popular cryptocurrencies varies greatly: cryptocurrencies based on proof-of-work (e.g. Bitcoin) consume much more electricity than their counterparts that use alternative consensus mechanisms, such as proof-of-stake (e.g. Ethereum). Nevertheless, proof-of-work cryptocurrencies dominate the market. We investigate whether energy labelling, i.e., displaying electricity consumption information on centralized exchanges, influences consumers' product preferences. We conduct a control/treatment study: during this study, participants with an interest in cryptocurrencies (N = 200) are presented with a fictitious cryptocurrency exchange user interface. The treatment group is shown a user interface that displays energy labels, while the control group receives no information related to electricity consumption. Participants then declare how likely they are to acquire particular cryptocurrencies. We measure the treatment effect and find a significant negative correlation (p = 0.002) between being exposed to energy labels and expressing a strong preference for energy-inefficient cryptocurrencies. Based on this finding, we reflect on the sustainability issues of cryptocurrencies and discuss how energy labelling on centralized exchanges can be applied to nudge investors away from energy-inefficient cryptocurrencies. This indicates that regulators would be well advised to consider energy labelling to address the adverse climate impacts of cryptoassets.
| Original language | English |
|---|---|
| Title of host publication | Proceedings - 2023 IEEE 43rd International Conference on Distributed Computing Systems Workshops, ICDCSW 2023 |
| Publisher | IEEE |
| Pages | 73-78 |
| Number of pages | 6 |
| ISBN (Electronic) | 9798350328127 |
| DOIs | |
| Publication status | Published - 2 Nov 2023 |
| Event | Workshop on Fintech and Decentralized Finance - Hong Kong, Hong Kong Duration: 18 Jul 2023 → … Conference number: 1 |
Publication series
| Name | Proceedings - 2023 IEEE 43rd International Conference on Distributed Computing Systems Workshops, ICDCSW 2023 |
|---|
Workshop
| Workshop | Workshop on Fintech and Decentralized Finance |
|---|---|
| Abbreviated title | FiDeFix |
| Country/Territory | Hong Kong |
| City | Hong Kong |
| Period | 18/07/2023 → … |
Keywords
- User Experience
- Sustainable Finance
- ESG Investing
- Electricity Consumption
- Energy Labels
- Sustainability Indicators
Access to Document
- The More You Know: Energy Labelling Enables More Sustainable Cryptocurrency Investments
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