Do crypto investors care about energy use and climate change? Evidence from Ethereum's transition to proof-of-stake

• Published in: Journal of environmental management 2024-10, Vol.369, p.122299, Article 122299
• Main Authors: Baur, Dirk G., Karlsen, Jonathan R.
• Format: Article
• Language: English
• Subjects: Carbon emissions; Climate Change; Conservation of Energy Resources; ESG; Ethereum; Investments; Mining; Proof-of-stake (PoS); Proof-of-work (PoW)
• ISSN: 0301-4797; 1095-8630; 1095-8630
• DOI: 10.1016/j.jenvman.2024.122299

This paper analyses the transition of Ethereum (ETH) from the energy-intensive Proof-of-Work (PoW) to the less energy-intensive Proof-of-Stake (PoS). We analyze returns, volatility, return correlations and volume of ETH, ETC and Bitcoin for all events in the lead-up to the actual change from PoW to PoS also labelled “the merge.” The analysis suggests that some investors value the less energy-intensive mining mechanism and invest in ETH. However, since the overall effect is weak, we conclude that despite all the media attention and the stated concerns about the high energy-intensity of Bitcoin and PoW, most investors do not react to the change with an increased investment in Ethereum. •Financial effects of Ethereum’s transition from energy-intensive Proof-of-Work to less energy-intensive Proof-of-Stake.•Analysis of returns, volatility, return correlations and volume of ETH, ETC and Bitcoin.•We identify no material financial effects for Ethereum, despite global concerns and media focus on Bitcoin's energy use.