Optimal timing of ESG-aligned blockchain adoption: A market-based decision and forecasting framework

We propose a market-based decision-support framework to guide the adoption of ESG-aligned blockchain technologies. This treats the cost of financing such technologies as a function of investor sentiment and applies sentiment forecasts to determine when adoption is economically optimal. We implement our framework using a novel set of blockchain ESG scores, data from the cryptocurrency markets and an investor sentiment proxy to identify periods when investors favour ESG features in blockchain technology. Our analysis reveals that blockchains with high ESG scores generate higher cryptocurrency returns than their lower-rated counterparts in times of optimistic market sentiment. However, they underperform in challenging market times. We also find that higher ESG scores are associated with higher market volatility. Governance and environmental factors have the strongest effect on investor preferences. On the basis of these findings, we model the adoption decision as a real-options timing problem and compute the sentiment level above which adoption is optimal. We find that delaying adoption until sentiment improves yields substantially greater value than adopting immediately. Overall, our work provides operational insights into how decision-makers can strategically integrate ESG features when introducing emerging technologies.