Assessing the short-term and long-term environmental impacts of the bitcoin industry based on Continuous Wavelet Transform and Wavelet Coherence: Implications for the evaluation of cryptocurrencies in the Islamic finance framework

The growing popularity of cryptocurrencies, especially bitcoin, has led miners to use the cheapest energy available through fossil fuels and to pay little attention to the release of pollutants and their destructive effects on the environment and future generations of humans. Therefore, the purpose of our research is to investigate the effects of cryptocurrency extraction on greenhouse gas emissions and, consequently, on the environment.

In this study, the effects of bitcoin mining on greenhouse gas emissions and environmental pollution were investigated using the method of "continuous wavelet transform and wavelet coherence". To achieve this, data such as bitcoin hash rate (energy consumption due to bitcoin extraction), and emission of four greenhouse gases, namely; Methane (CH4), carbon dioxide (CO2), nitrogen dioxide (N2O), and sulfur hexafluoride (SF6) were used monthly from 2009 to 2020.

Although from the point of view of bitcoin crypto industry miners in the short run, the results showed that its effects and destructive effects on the environment can be seen in the long term.

The cryptocurrencies industry is one of the main factors in the emission of pollutants and greenhouse gases, and most of their extraction has a positive and significant effect on the emission of environmental pollutants and their fluctuations, in the long term. With the help of this research, the index of the impact of cryptocurrencies on the environment, future generations and intergenerational justice can be considered as a criterion for approving or disapproving of this industry in the Islamic financial framework.