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Crypto swings and the performance of carbon-intensive equity funds in China

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  • Umar, Muhammad
  • Ji, Xiangfeng
  • Mirza, Nawazish
  • Li, Haiping

Abstract

The massive reliance on the consumption of non-renewable energy resources for bitcoin mining has environmental implications. This paper addresses a critical research gap related to the performance of carbon-intensive equity funds in China – the country with maximum hashrate − during the crypto boom and bust periods between 2013 and 2021. We employ event study methodology and assess funds based on their investment exposure. The findings demonstrate significant abnormal returns for high-emission funds during the price booms. The abnormal returns reduce as we move across categories and are non-existent for the pro-ecological funds. We also report a positive relationship between investment flows and increasing bitcoin prices, and the impact becomes less profound for low-carbon funds. While demonstrating the effects of variation in crypto prices on investment performance and flows, the results indicate possible impediments to a sustainable financial system. Our findings highlight the relevance of using renewable resources to mitigate climatic concerns.

Suggested Citation

  • Umar, Muhammad & Ji, Xiangfeng & Mirza, Nawazish & Li, Haiping, 2022. "Crypto swings and the performance of carbon-intensive equity funds in China," Resources Policy, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722002343
    DOI: 10.1016/j.resourpol.2022.102786
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    Cited by:

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    9. Wang, Jying-Nan & Vigne, Samuel A. & Liu, Hung-Chun & Hsu, Yuan-Teng, 2024. "Divergent jump characteristics in brown and green cryptocurrencies: The role of energy-related uncertainty," Energy Economics, Elsevier, vol. 138(C).
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    More about this item

    Keywords

    Carbon funds; Bitcoin; Funds performance; Investment flows;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources

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