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The cryptocurrency uncertainties and investment transitions: Evidence from high and low carbon energy funds in China

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  • Yan, Lei
  • Mirza, Nawazish
  • Umar, Muhammad

Abstract

Due to the investment and diversification potential, cryptocurrencies are considered to be attractive for both sophisticated and amateur investors. However, the high levels of electricity consumption of the hashing is a significant environmental concern, specifically in China, with dominant coal-based electricity production. This paper assesses the impact of price and policy uncertainties of the cryptocurrencies on the investment flows of the funds that have been sorted as per their exposure towards coal and natural gas firms. Therefore, we have employed the data for 1920 funds, between the time span pertaining to the years 2014 and 2021. Our findings show that both policy and price uncertainty tend to have an impact on the investment flows in high carbon funds, while these uncertainties have no relationship with the low emission funds. The results also indicate that the impact tends to be more profound for the younger funds. The performance of cryptos and their link with investment flows can limit the transition to low carbon sustainable options. We therefore propose that policymakers further ensure a swift adoption of renewable resources for electricity production, in order to successfully mitigate the climate impact. This could ultimately aid in promoting green investment flows.

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  • Yan, Lei & Mirza, Nawazish & Umar, Muhammad, 2022. "The cryptocurrency uncertainties and investment transitions: Evidence from high and low carbon energy funds in China," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    • Handle: RePEc:eee:tefoso:v:175:y:2022:i:c:s0040162521007575
    DOI: 10.1016/j.techfore.2021.121326
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    7. Cynthia Weiyi Cai & Rui Xue & Bi Zhou, 2023. "Cryptocurrency puzzles: a comprehensive review and re-introduction," Journal of Accounting Literature, Emerald Group Publishing Limited, vol. 46(1), pages 26-50, June.
    8. Liu, Zhihong & ul Islam, Misbah & Alarifi, Ghadah Abdulrahman & Cong, Phan The & Khudoykulov, Khurshid & Quynh, Le Nhu & Hossain, Md. Shamim, 2023. "Does energy efficiency mediate a green economic recovery? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 802-815.
    9. Shang, Yue & Wei, Yu & Chen, Yongfei, 2022. "Cryptocurrency policy uncertainty and gold return forecasting: A dynamic Occam's window approach," Finance Research Letters, Elsevier, vol. 50(C).
    10. Yousaf, Imran & Goodell, John W., 2023. "Linkages between CBDC and cryptocurrency uncertainties, and digital payment stocks," Finance Research Letters, Elsevier, vol. 54(C).
    11. Clark, Ephraim & Lahiani, Amine & Mefteh-Wali, Salma, 2023. "Cryptocurrency return predictability: What is the role of the environment?," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
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    13. Zhong, Yufei & Chen, Xuesheng & Wang, Chengfang & Wang, Zhixian & Zhang, Yuchen, 2023. "The hedging performance of green bond markets in China and the U.S.: Novel evidence from cryptocurrency uncertainty," Energy Economics, Elsevier, vol. 128(C).
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    More about this item

    Keywords

    Green investments; Carbon funds; Cryptocurrencies; Uncertainty;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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