Digital Assets
Bitcoin, Carbon Markets and the Hidden Cost of Energy
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Bitcoin (BTC ) was designed to create a new form of digital money, independent of fiat currencies and the global economy, pushing the concept of “digital gold”, where Bitcoin would become the new global reserve of value for the digital age.
At the same time, Bitcoin’s validation mechanism, proof of work (PoW), makes it an extremely power-intensive process. This risks tying an otherwise independent monetary asset to move in sync with energy volatility.
A recent study by researchers at Dicle University (Turkey), Gaziantep University (Turkey), and the Lebanese American University illustrates this trend. It found that cryptocurrency and carbon markets can become interconnected, with Bitcoin showing stronger and more persistent links than lower-energy digital assets.
This could mean that investors need to be more aware of this connection and treat it as a direct factor in their investment strategy, instead of just seeing it as a correlation with the wider economic environment.
They published their findings in the International Review of Economics & Finance1, under the title “Cryptocurrency–carbon market connectedness: Evidence from energy-intensive and energy-efficient digital assets”.
Bitcoin Hunger For Energy
While often exaggerated in sensational headlines, it is true that Bitcoin’s annual electricity consumption is approximately 127 TWh due to how PoW functions, comparable to the energy use of a mid-sized national economy. This corresponds to an annualized carbon footprint of around 71 million tons of CO2.
In comparison, cryptocurrencies such as Cardano (ADA ) (ADA), Solana (SOL ) (SOL), and TRON (TRX ) (TRX) rely on Proof-of-Stake (PoS) consensus mechanisms, which makes them exhibit substantially lower energy intensity and carbon impact.
This energy need makes Bitcoin potentially vulnerable to carbon pricing, climate policy uncertainty, and energy market conditions.
This raises the question of whether Bitcoin is uniquely impacted by carbon prices and energy prices in general, compared to other cryptocurrencies. And how much does it matter for investors?
Cryptos & Carbon Markets
Gathering Data
The researchers collected the daily closing prices, logarithmic returns, and volatility for Bitcoin (BTC), Ripple (XRP), and the S&P Global (SPGI ) Carbon Credit Index (GCC).
The sample used to analyze this question ranged from January 8, 2018, to December 19, 2025. It traverses periods of systemic uncertainty, including the COVID-19 pandemic and geopolitical conflicts, allowing for an examination of interactions between assets and markets under extreme conditions.
They then used a quantile-on-quantile vector autoregressive frequency connectedness (QQVAR-FC) framework to examine cryptocurrency–carbon market linkages.
Bitcoin, XRP & Energy
The results of the analysis show that Bitcoin exhibits the strongest return connectedness with the carbon market. This effect was especially marked for the upper-tail quantile, indicating intensified spillovers during periods when both markets experience positive shocks.
The authors argue that XRP is less directly exposed to carbon allowance prices because its consensus mechanism does not depend on energy-intensive mining.
So under bullish conditions for Bitcoin, regardless of whether carbon markets are rising or falling, energy consumption levels exert a pivotal influence on the connection between Bitcoin and carbon markets.
This makes Bitcoin, from a return perspective, a net receiver of shocks from the carbon market across a wide range of market states and frequencies.
The cause of this link is likely that an increases in carbon allowance prices elevate Bitcoin’s mining costs, whereas XRP, as an energy-efficient cryptocurrency, is largely unaffected.
Effect Of Time Horizon
As carbon markets have evolved, they have become more sophisticated and liquid. This, in turn, has increased their connectedness not just to Bitcoin, but to the energy market in general.
This might contribute to the effect that the strength and persistence of directly related connectedness between Bitcoin and carbon markets have intensified over time.
Still, return connectedness is predominantly influenced by major events in the full sample and short run.
Over longer horizons, return connectedness generally weakens, indicating that much of the return spillover identified by the researchers is transitory and event-driven. Volatility spillovers, however, prove more persistent.
Investors Takeaways
This study shows investors that energy shocks and the carbon market can directly affect Bitcoin prices. A connection that most investors might be underestimating.
This is especially true in the case of volatility spillovers rather than return spillovers, and for short-term effects rather than long-term effects.
From a portfolio perspective, the hedging potential of carbon credits appeared limited. XRP, on the other hand, offers the most significant conditional diversification benefits.
This means that, especially for trading and carbon–cryptocurrency portfolios, energy-efficient cryptocurrencies such as Ripple may offer more reliable diversification benefits. This should be particularly true when the primary objective is spillover minimization rather than return maximization.
A definitive strategy working in all conditions might, however, be difficult to formulate, as risk-adjusted portfolio performance exhibits variability across regimes and horizons, with no specific market state demonstrating consistent dominance.
So overall, the underlying architecture of a blockchain may increasingly need to be treated as an investment variable, especially for short-term trading, rather than merely a technical or environmental characteristic.
Investing In Bitcoin Mining
MARA Holdings
MARA Price Chart
MARA Holdings is one of the largest publicly traded Bitcoin mining operations and the second-largest corporate holder of Bitcoin in the world.
The company is not just a Bitcoin mining operation, but also a producer of the energy required for the mining as well, reflecting its evolution from initially just renting compute capacity to today owning compute and energy production altogether.
Source: MARA Holdings
As the company itself explains:
MARA operates at the intersection of three of the fastest-growing industries on Earth: energy, compute, and digital capital.”
A further step in that path has been taken with an agreement to acquire Long Ridge Energy for approximately $1.5 billion, a company with a nameplate capacity of 505 MW from a Combined Cycle Gas Power Plant (“CCGT”). This will represent a 65% increase in MARA’s owned and operated power capacity and would otherwise take around 10 years and up to $2.7B to build.
The company plans to keep building more energy capacity, targeting 400 MW of additional capacity by 2030.
Source: MARA Holdings
Total power generation capacity could grow beyond that, with the planned Matagorda 2 GW site in Texas, which will start construction at the end of 2026 and reach full production in 2028.
Like many Bitcoin mining companies, MARA is also active in selling compute for AI inference, a task for which the capacities of Bitcoin mining chips are almost a perfect fit.
“At MARA, we’ve anticipated these shifts and are building solutions designed for the future of AI workloads… focus on developing grid responsive platforms that dynamically stabilize inference compute, minimize energy waste, and unlock the next generation of field deployable, sovereign edge AI infrastructure.”
This should give the company flexibility in how it uses its compute capacity, potentially switching between Bitcoin and AI inference depending on market conditions.
“Compute requires power. Power is scarce. MARA controls the power.”
The company is also building a partnership to capture as much as possible of the AI value stack, allying with the private investment firm Starwood Capital Group and the sovereign high-performance computing data centers Exaion
Source: MARA Holdings
With an upcoming energy shock from wars in the Middle East and escalating Ukrainian-Russian strikes on energy infrastructure, investors in Bitcoin or AI should pay attention to producers who can exercise some control over energy costs.
This makes a pre-emptive focus on controlling power production important for MARA’s future, whether for Bitcoin production and its vulnerability to energy shocks proven in this study or for AI compute workloads.
Latest MARA Holdings (MARA) Stock News and Developments
Study Referenced
1. Remzi Gök, Elie Bouri, Eray Gemici. Cryptocurrency–carbon market connectedness: Evidence from energy-intensive and energy-efficient digital assets. International Review of Economics & Finance. October 2026. Article: 105749. Volume 111. 10.1016/j.iref.2026.105749
