Energy Demand Unawareness and the Popularity of Bitcoin: Evidence from Nigeria

• Published in: Oxford Open Energy 2023-10, Vol.2
• Main Authors: Platt, Moritz, Ojeka, Stephen, Drăgnoiu, Andreea-Elena, Ibelegbu, Oserere Ejemen, Pierangeli, Francesco, Sedlmeir, Johannes, Wang, Zixin
• Format: Article
• Language: English
• ISSN: 2752-5082; 2752-5082
• DOI: 10.1093/ooenergy/oiad012

Abstract Decentralized cryptocurrency networks, notably those with high energy demand, have faced significant criticism and subsequent regulatory scrutiny. Despite these concerns, policy interventions targeting cryptocurrency operations in the pursuit of sustainability have largely been ineffective. Some were abandoned for fear of jeopardizing innovation, whereas others failed due to the highly globalized nature of blockchain systems. In search of a more effective angle for energy policy measures, this study adopts a consumer-centric perspective, examining the sentiments of Nigerian cryptocurrency users ($n=158$) toward Bitcoin’s sustainability, a representative cryptocurrency known for its high electricity demand. Three main findings emerged: 1) Even among those self-identifying as highly knowledgeable, most considerably underestimated Bitcoin’s electricity consumption. 2) Participants with a more accurate understanding of Bitcoin’s energy demand were more inclined to support sustainability measures. 3) Most of this supportive cohort viewed private entities as the primary stakeholders for implementing such measures. Given these findings, we suggest that consumer education should be at the forefront of policy initiatives aimed at cryptocurrency sustainability. Cryptocurrencies like Bitcoin consume a lot of electricity, raising environmental concerns. This study surveyed 158 Nigerian cryptocurrency users to understand their awareness of the energy use of Bitcoin. The findings revealed that, although many participants considered themselves Bitcoin experts, most underestimated its energy demand. Those who were aware of the actual energy demand were more supportive of measures to reduce it. The study suggests that better educating consumers about the environmental impacts of their cryptocurrency choices, potentially through energy labelling (a practice that provides information on cryptocurrency energy efficiency to users), could lead to more sustainable practices. Graphical Abstract Graphical Abstract