The (Un-)Sustainability of Bitcoin Investments

19 Pages Posted: 22 Apr 2019

See all articles by Dirk G. Baur

Dirk G. Baur

University of Western Australia - Business School; Financial Research Network (FIRN)

Josua Oll

University of Hamburg

Date Written: April 4, 2019


This paper analyzes if Bitcoin enhances investment portfolios both financially and in terms of lower carbon emissions. We show that the addition of Bitcoin to a diversified equity portfolio does improve the risk-return relationship of the portfolio but not its sustainability by reducing the portfolio’s carbon emissions. More specifically, current carbon footprint estimates of the Bitcoin network significantly deteriorate the sustainability of portfolios even for small Bitcoin allocations, as Bitcoin mining forms an extremely energy- and carbon-intensive process. Given the significant energy consumption of Bitcoin, we further study the relationship between Bitcoin prices and energy prices. Our analysis indicates that Bitcoin’s energy consumption influences energy company valuations, which in turn influences Bitcoin prices. Overall, our findings substantiate the unsustainability of Bitcoin investments from a carbon perspective. However, if Bitcoin miners increasingly utilize renewable energy sources, such a hydrogen or solar power, the Bitcoin network may become cleaner in the future – potentially transforming Bitcoin into a carbon diversifier.

Keywords: Bitcoin; carbon footprint; sustainability; diversification

JEL Classification: G11, G18

Suggested Citation

Baur, Dirk G. and Oll, Josua, The (Un-)Sustainability of Bitcoin Investments (April 4, 2019). Available at SSRN: or

Dirk G. Baur (Contact Author)

University of Western Australia - Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane


Josua Oll

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146

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