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The impact of the Bitcoin price on carbon neutrality: Evidence from futures markets

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  • Wu, Xiangling
  • Ding, Shusheng

Abstract

The Paris Agreement (COP21) has provoked a global carbon neutralization episode in recent years. The mining of Bitcoin has been criticized for its tremendous demand for electricity power, which may be contradictory to the carbon neutralization process. Therefore, we attempt to scrutinize the impact of Bitcoin futures price shocks on the carbon futures markets in this study. We investigate the Bitcoin futures price shock toward carbon futures markets in different regions. We demonstrate that this spillover effect of the Bitcoin price shock is strongest in the US carbon futures market whilst weakest in the New Zealand carbon futures market. The US carbon futures market absorbed a large proportion of the Bitcoin futures price shock because Bitcoin is priced in US dollars. Furthermore, we also unravel the fact that the effect of Bitcoin price shocks persists over a long period of time, normally persisting for 4 periods regarding all three carbon futures markets. Finally, our research sheds light on the connection between Bitcoin futures and carbon futures. The nexus of Bitcoin futures with carbon futures rests on the mining mechanism of the Bitcoin system, which has attracted enormous attention in academia.

Suggested Citation

  • Wu, Xiangling & Ding, Shusheng, 2023. "The impact of the Bitcoin price on carbon neutrality: Evidence from futures markets," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323005007
    DOI: 10.1016/j.frl.2023.104128
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    Cited by:

    1. Wei, Yu & Hu, Rui & Zhang, Jiahao & Wang, Qian, 2024. "Does the carbon market signal the market efficiency of clean and dirty cryptocurrencies? An analysis of quantile directional dependence," Finance Research Letters, Elsevier, vol. 67(PB).

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    More about this item

    Keywords

    Bitcoin futures; Carbon futures; Carbon neutrality; Spillover effect;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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