Crypto-asset mining and distributed ledger technology consensus mechanisms

Crypto-asset markets are rapidly developing and reached USD 3tn in late 2021, yet the infrastructure supporting mainstream crypto-assets, such as the Bitcoin, use an enormous amount of energy.

>>> OCDE (2022), « Environmental impact of digital assets : Crypto-asset mining and distributed ledger technology consensus mechanisms », OECD Business and Finance Policy Papers, n° 16, Éditions OCDE, Paris,

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This paper explores the growing environmental impact of crypto-assets due to increasing institutional and retail investors participation in these markets. The use of energy-intensive transaction validation through Proof-of-Work consensus mechanisms and the corresponding carbon footprint create climate transition risks for market participants. Policy considerations and action are necessary given the carbon footprint and associated climate transition risks of certain digital assets when combined with negative externalities extending to the wider society.

This report examines the environmental impact of digital assets, focusing on crypto-assets and consensus
mechanisms of distributed ledger technologies (DLTs) given increased institutional and retail participation
in these markets. It examines the differences in carbon footprint of different consensus mechanisms and
underlines the lack of reliable data evidence around the carbon footprint of the different crypto-asset
activities and consensus mechanisms. The report explains why the use of renewable energy is not
sufficient to curb the negative externalities and highlights the importance of international cooperation and
coordination in policy action around crypto-asset mining, before putting forward policy considerations.

The report has been drafted by Iota Kaousar Nassr under the supervision of Robert Patalano from the
Division of Financial Markets of the OECD Directorate for Financial and Enterprise Affairs. Edward Keunuk
Shin provided research assistance and Liv Gudmundson provided editorial and communication support.
The report supports the work of the OECD Committee on Financial Markets and is a product of its Expert
Group on Finance and Digitalisation, both chaired by Aerdt Houben. It was first discussed by the Expert
Group in April 2022 and then discussed by the Committee in October 2022. The report was declassified
on 21 November 2022.

The author gratefully acknowledges valuable input and constructive feedback provided by the following
individuals and organisations: Adam Głogowski, National Bank of Poland; Giuseppe Grande, Ilaria Supino,
Giuseppe Ferrero, Carlo Gola, Banca d’Italia; Peter Grills and Paull Randt, US Treasury; Alex Ivančo and
Lenka France Rejkova, Ministry of Finance of the Czech Republic; Eleftheria Kostika, Bank of Greece;
Nora Marija Laurinaitytė, Bank of Lithuania; Benjamin Müller, Swiss National Bank; Borut Poljšak, Bank of
Slovenia; Mai Santamaria, Department of Finance, Ireland; Ryosuke Ushida, Financial Services Agency,
Japan. The report has also benefited from views and input provided by academia and the industry.
The report was supported through funding by the Government of Japan.

Source : OECD, 2 december 2022

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