Bits of Bitcoin Research (BBR) – Issue #0

BBR – Print Knowledge, Not Money.

Hi everyone,

Welcome to the kick-off of my new newsletter Bits of Bitcoin Research, or in short, BBR. I'm happy that you've found your way here to explore insights into the world of Bitcoin research.

What to Expect

Bitcoin is growing in importance, and so is the body of academic research around it. While finance remains a dominant area of focus—examining Bitcoin's behavior relative to other assets—is an increasing number of studies on its environmental impact and other dimensions.

Through this newsletter, I'll share research and reports I encounter that I find insightful. Initially, I intend to publish BBR every two weeks on Wednesdays. If research output continues to grow with rising Bitcoin adoption, I may shift to more frequent updates.

Each issue will highlight key findings and let you decide whether a deep dive is worth your time. My primary focus will be on Bitcoin mining, environmental impacts, and its role as an asset. While technical protocol-layer research is important, it's mostly beyond my expertise so I will be sharing less of it.

A Note on Research Quality and My Bias

In academic research one paper isn’t clear evidence of something being true or not. Often you will find papers with conflicting views. This may be due to the time period, methodology, selected data and more. This does not mean that this research is bad. It is a process of scientific consensus over time and even that may change as conditions and the world around us evolves. Just keep that in mind when reading the research papers.

Those of you who know me that know that I am a Bitcoiner so obviously I am a bit biased in that regard and will naturally be leaning more towards positive research.

While my sharing of positive research may partly reflect personal bias, it's also because much of the negative research about Bitcoin - especially regarding mining and environmental impact - is based on debunked sources.

I want to rather focus on interesting research than to start debunking flawed research in this newsletter.

My colleagues Dr Simon Collins and Dr. Rian D. Dewhurst at the Digital Assets Research Institute have written a whole report on that how one bad scientific paper has led to thousands of papers being written with flawed methodologies. And with that let's jump right in.

Paper 1: Bitcoin Studies and Academic Misinformation

Collins, S., & Dewhurst, R. D. (2024). Runaway Citations and the Persistence of Bitcoin Misinformation. Digital Assets Research Institute Working Paper. https://www.da-ri.org/articles/working-paper-runaway-citations-and-the-persistence-of-bitcoin-misinformation

This working paper explores how flawed research on Bitcoin's energy use became deeply embedded in academic literature through methodologically unsound studies that continue to be widely cited.

Main Findings

• Early flawed research, particularly by de Vries (2018), accrued over 5,000 citations despite critical errors

• More rigorous studies receive only about 2% as many citations

• The flawed narrative controlled the conversation for years, making it difficult for better research to gain traction

Data

• Citation data from academic literature 2018-2024

• Analysis of methodological flaws in key papers

• Tracking of citation patterns using LitMaps software

• Comparison between flawed and methodologically sound papers

Methodology

• Systematic review of literature and citation patterns

• Analysis of methodological flaws in highly cited papers

• Citation network mapping

• Comparison of citation counts between papers with methodological flaws versus those with reproducible methodologies

The study concludes that while rigorous research is slowly shifting the narrative—as evidenced by declining media coverage of Bitcoin's energy use since 2022—correcting entrenched misinformation remains a challenge.

Paper 2: On Bitcoin's and Gold's Safe Haven Properties

Chibane, M., & Janson, N. (2024). Is Bitcoin the Best Safe Haven Against Geopolitical Risk? Finance Research Letters. https://doi.org/10.1016/j.frl.2024.106543

This study examines whether Bitcoin and other traditional safe-haven assets protect U.S. equity investors from geopolitical risks.

Main Findings

• Bitcoin and the Swiss Franc are the most effective safe havens during geopolitically-driven market crashes

• Bitcoin's correlation with the S&P 500 falls from 0.2 to -0.4 during high geopolitical risk, while Gold's correlation increases from 0.13 to 0.45

• The protective qualities of Bitcoin and Swiss Franc are particularly evident during major market movements

Data

• Weekly data from September 2015 to May 2023

• Two sub-samples (1st ending February 2022 and 2nd ending May 2023)

• Assets analyzed: S&P 500, Bitcoin, Gold, Swiss Franc, iShares U.S. Treasury Bond index (7-10 years maturity)

• Geopolitical Risk (GPR) index from Caldara and Iacoviello

Methodology

• Jump-diffusion framework combining:

  • Standard Gaussian process

  • Non-Gaussian negative jump process for crash events

• Crash probability modeled as function of geopolitical risk levels

• Quasi-maximum likelihood estimation for crash parameters

• 20-week rolling windows for correlation analysis

Industry Perspective

BlackRock's September 17, 2024 report corroborates these findings. While Bitcoin may react negatively to uncertainty in the short term, their analysis shows that 60-day returns have been positive even when gold or the S&P 500 underperformed.

(See: https://www.blackrock.com/us/financial-professionals/insights/bitcoin-unique-diversifier)

In an uncertain world, it nakes sense to hold some Bitcoin.

Paper 3: Green Hydrogen and Bitcoin's Climate Impact

Lal, A., & You, F. (2024). Can Climate Change Mitigation be Catalyzed through Green Hydrogen Coupled with Crypto's Resurgence? Chemical Engineering Transactions. https://www.cetjournal.it/index.php/cet/article/view/CET24114061

This Cornell study examines how combining Bitcoin mining with green hydrogen technology could accelerate climate action and renewable energy adoption across U.S. states.

Main Findings

• Integrating Bitcoin mining with green hydrogen infrastructure drives renewable power expansion

• When combined with green hydrogen incentives, states can achieve carbon capture of at least 7.4 tCO2-eq per Bitcoin mined

• Effectiveness varies significantly by state, with New Mexico showing the highest potential for solar capacity expansion and Wyoming, South Dakota, and Oklahoma leading in wind energy potential

Data

• U.S. state-level wind speed and solar irradiation data

• Performance metrics of renewable power facilities

• Bitcoin network dynamics (prices, difficulties, mining distribution)

• Equipment specifications for mining, heat pumps, electrolyzers, and Direct Air Capture (DAC)

• Economic parameters and emission factors

Methodology

• Systems optimization framework

• Load balance analysis between Bitcoin mining and green hydrogen production

• Economic evaluation incorporating capital and operational costs

• State-by-state assessment of renewable energy potential

• Analysis of carbon capture capabilities through Direct Air Capture (DAC)

Wrapping Up

I hope you found this first newsletter useful and informative. The papers we covered show the diverse range of Bitcoin research happening right now - from analyzing research quality to understanding Bitcoin's role in finance and the environment.

What's Missing?

What would make this newsletter more valuable to you? Are there specific aspects of Bitcoin research you'd like to see covered? Should we add specific sections or focus on particular themes? Your input will help shape future issues.

Help Spread the Word

If you found this newsletter format useful, I'd greatly appreciate you sharing it with others who might be interested in Bitcoin research. The more readers we reach, the richer our discussion of Bitcoin research can become.

As always—don't trust, verify!

Have a great Wednesday!