Asymmetric effects of climate policy uncertainty and energy prices on bitcoin prices

Sarker, Provash Kumer; Lau, Chi Keung Marco; Pradhan, Ashis Kumar

doi:10.1016/j.igd.2023.100048

Cited by 21 publications

(6 citation statements)

References 24 publications

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“…Therefore, the more uncertain climate policy is, the more likely it is that bitcoin will continue to rely on these nonrenewable energy sources. In addition, Sarker et al (2023) confirmed that climate-related uncertainties affect Bitcoin prices. They found that the asymmetric effects of CPU and the global price of energy index (GPEI) on Bitcoin prices.…”

Section: Introductionmentioning

confidence: 57%

“…Several studies have concluded that excessive cryptocurrency mining could multiply future energy needs, increase the energy intensity of industries, harm the natural environment and subsequently cause uncertain climate conditions if cryptocurrency mining is sustained. Hence, CPU may also create a regulatory risk for Bitcoin (Sarker et al , 2023). Consequently, the development of virtual currencies has attracted the attention of researchers and policymakers due to the imminent threats to the environment, raising questions about its sustainability and carbon neutrality (Yahya and Lee, 2023).…”

Section: Introductionmentioning

confidence: 99%

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The effect of policy uncertainty on the volatility of bitcoin

Mahjoubi,

Henchiri

2024

JFEP

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Purpose This paper aims to investigate the effect of the economic policy uncertainty (EPU), geopolitical risk (GPR) and climate policy uncertainty (CPU) of USA on Bitcoin volatility from August 2010 to August 2022. Design/methodology/approach In this paper, the authors have adopted the empirical strategy of Yen and Cheng (2021), who modified volatility model of Wang and Yen (2019), and the authors use an OLS regression with Newey-West error term. Findings The results using OLS regression with Newey–West error term suggest that the cryptocurrency market could have hedge or safe-haven properties against EPU and geopolitical uncertainty. While the authors find that the CPU has a negative impact on the volatility of the bitcoin market. Hence, the authors expect climate and environmental changes, as well as indiscriminate energy consumption, to play a more important role in increasing Bitcoin price volatility, in the future. Originality/value This study has two implications. First, to the best of the authors’ knowledge, the study is the first to extend the discussion on the effect of dimensions of uncertainty on the volatility of Bitcoin. Second, in contrast to previous studies, this study can be considered as the first to examine the role of climate change in predicting the volatility of bitcoin. This paper contributes to the literature on volatility forecasting of cryptocurrency in two ways. First, the authors discuss volatility forecasting of Bitcoin using the effects of three dimensions of uncertainty of USA (EPU, GPR and CPU). Second, based on the empirical results, the authors show that cryptocurrency can be a good hedging tool against EPU and GPR risk. But the cryptocurrency cannot be a hedging tool against CPU risk, especially with the high risks and climatic changes that threaten the environment.

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Section: Introductionmentioning

confidence: 57%

Section: Introductionmentioning

confidence: 99%

The effect of policy uncertainty on the volatility of bitcoin

Mahjoubi,

Henchiri

2024

JFEP

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“…The process of mining cryptocurrency, which involves solving complex mathematical equations to validate transactions and secure the blockchain, consumes large amounts of energy. It has raised concerns about the environmental impact of cryptocurrency, as the energy con-sumption of mining is estimated to be as high as 110 TWh per year, which is comparable to the energy consumption of a small country [23]. While proponents of cryptocurrency argue that it has the potential to increase financial inclusion, others argue that it may exacerbate existing inequalities.…”

Section: Literature Reviewmentioning

confidence: 99%

Problems and Prospects of Cryptocurrency Usage in China and Cambodia

Liv,

Awori,

Fedyunin

2024

RoBES

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The transformation of the digital economy has been constantly evolving in the society of the 4.0 industrial revolution, particularly under the governmental policies of developed countries. One of the most popular tools in digital economy activities is cryptocurrency, which has led to a rise in digital awareness among people who are more inclined to live their lives electronically and digitally. The aim of this study is to explore the problems and prospects associated with the usage of cryptocurrency and identify ways to address these issues using the governmental roadmap in China and Cambodia. The methods employed in this study include descriptive, explanatory, and comparative analyses. The results demonstrate that the adoption of cryptocurrency presents both opportunities and threats to the Chinese and Cambodian economies. These opportunities and threats need to be carefully considered and balanced by policymakers and stakeholders. The conclusion drawn from the study is that there is still no official acceptance and recognition of cryptocurrency by the Chinese and Cambodian governments. This is primarily due to the fact that the risks and challenges associated with cryptocurrencies are deemed to be greater than the foreseeable opportunities, making them difficult to manage effectively.

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“…More recently, based on the NARDL method as well as the Granger causality test, ref. [28] assesses whether global energy prices and climate policy uncertainty affect BP. The results reported in this study demonstrate the asymmetric effect of energy prices and climate policy uncertainty on BP.…”

Section: Literature Reviewmentioning

confidence: 99%

Testing the Nonlinear Long- and Short-Run Distributional Asymmetries Effects of Bitcoin Prices on Bitcoin Energy Consumption: New Insights through the QNARDL Model and XGBoost Machine-Learning Tool

Tissaoui,

Zaghdoudi,

Boubaker

et al. 2024

Energies

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This study investigates the asymmetric impacts of Bitcoin prices on Bitcoin energy consumption. Two series are shown to be chaotic and non-linear using the BDS Independence test. To take into consideration this nonlinearity, we employed the QNARDL model as a traditional technique and Support Vector Machine (SVM) and eXtreme Gradient Boosting (XGBoost) as non-conventional approaches to study the link between Bitcoin energy usage and Bitcoin prices. Referring to QNARDL estimates, results show that the relationship between Bitcoin energy use and prices is asymmetric. Additionally, results demonstrate that changes in Bitcoin prices have a considerable effect, both short- and long-run, on energy consumption. As a result, any upsurge in the price of Bitcoin leads to an immediate boost in energy use. Furthermore, the short-term drop in Bitcoin values causes an increase in energy use. However, higher Bitcoin prices reduce energy use in the long run. Otherwise, every decline in Bitcoin prices leads to a long-term reduction in energy use. In addition, the performance metrics and convergence of the cost function provide evidence that the XGBoost model dominates the SVM model in terms of Bitcoin energy consumption forecasting. In addition, we analyze the effectiveness of several modeling approaches and discover that the XGBoost model (MSE: 0.52%; RMSE: 0.72 and R2: 96%) outperforms SVM (MSE: 4.89; RMSE: 2.21 and R2: 75%) in predicting. Results indicate that the forecast of Bitcoin energy consumption is more influenced by positive shocks to Bitcoin prices than negative shocks. This study gives insights into the policies that should be implemented, such as increasing the sustainable capacity, efficiency, and flexibility of mining operations, which would allow for the reduction of the negative impacts of Bitcoin price shocks on energy consumption.

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Asymmetric effects of climate policy uncertainty and energy prices on bitcoin prices

Cited by 21 publications

References 24 publications

The effect of policy uncertainty on the volatility of bitcoin

The effect of policy uncertainty on the volatility of bitcoin

Problems and Prospects of Cryptocurrency Usage in China and Cambodia

Testing the Nonlinear Long- and Short-Run Distributional Asymmetries Effects of Bitcoin Prices on Bitcoin Energy Consumption: New Insights through the QNARDL Model and XGBoost Machine-Learning Tool

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