Analyzing asymmetric effects of cryptocurrency demand on environmental sustainability

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ERDOĞAN S., Ahmed M. Y., Sarkodie S. A.

Environmental Science and Pollution Research, vol.29, no.21, pp.31723-31733, 2022 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 29 Issue: 21
  • Publication Date: 2022
  • Doi Number: 10.1007/s11356-021-17998-y
  • Journal Name: Environmental Science and Pollution Research
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, IBZ Online, ABI/INFORM, Aerospace Database, Aqualine, Aquatic Science & Fisheries Abstracts (ASFA), BIOSIS, CAB Abstracts, EMBASE, Environment Index, Geobase, MEDLINE, Pollution Abstracts, Veterinary Science Database, Civil Engineering Abstracts
  • Page Numbers: pp.31723-31733
  • Keywords: Asymmetric causality, Bitcoin (BTC), Cryptocurrency, Environmental sustainability, Ethereum (ETH), Ripple (XRP)
  • Hatay Mustafa Kemal University Affiliated: Yes

Abstract

When bitcoin (BTC), the first pioneering cryptocurrency was released in 2009, it was considered an apolitical currency. Besides, the possible effect of BTC and other cryptocurrencies on either financial markets or transactions has been widely discussed. However, the environmental effects of cryptocurrency demand have been ignored. Here, this study examines the nexus between cryptocurrencies and environmental degradation by employing standard and asymmetric causality methods. The Toda-Yamamoto and bootstrap-augmented Toda-Yamamoto test results reveal Bitcoin and Ethereum (ETH) excluding Ripple (XRP) have causal effects on environmental degradation. The Fourier-augmented Toda-Yamamoto test results show causal effects running from Bitcoin and Ripple to environmental degradation, whereas no causal effect runs from Ethereum to environmental degradation. The asymmetric causality shows causal effects from the positive shock of Bitcoin demand, negative shocks of Ripple and Ethereum demands to positive shocks of environmental degradation. Further discussions and policy implications are provided in the relevant sections of this study.