Hazy returns: does air pollution affect cryptocurrencies?
Anirudh Singh and
Madhumita Chakraborty
Studies in Economics and Finance, 2025, vol. 42, issue 4, 780-798
Abstract:
Purpose - This study aims to examine whether rising air pollution impacts cryptocurrency returns across different categories. Design/methodology/approach - This study uses panel regression to investigate the impact of air pollution on cryptocurrencies between January 2014 and June 2023. Cryptocurrency prices are sourced fromwww.coinmarketcap.com. Air quality is measured using the air quality index (AQI) values provided by the World Air Quality Index Project. Generalized method of moments (GMM) estimators for dynamic panel regression have also been used to control for endogeneity concerns. Findings - High AQI levels are observed to negatively affect cryptocurrency returns. This impact remains absent during good air quality and for cryptocurrencies with lower energy consumption like stablecoins, clean energy and health cryptocurrencies, supporting the argument that rising air pollution leads to lower returns for cryptocurrencies more prone to damaging the environment. Practical implications - The findings of this study could offer investors valuable insights in formulating more efficient cryptocurrency trading strategies. It also demonstrates how environmental variables influence the performance of volatile assets like cryptocurrencies. The presence of lower returns for currencies perceived as damaging to the environment could put the focus on promoting sustainability in the production of such digital currencies. Originality/value - No prior study has investigated the influence of AQI on cryptocurrency returns. This study aims to focus on the behavioral aspect of financial decision-making. As cryptocurrency adoption rates rise across the globe, the findings of this study can provide useful insights to cryptocurrency traders.
Keywords: Cryptocurrency; Air pollution; AQI; Clean energy cryptocurrency; Sustainability (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eme:sefpps:sef-03-2024-0180
DOI: 10.1108/SEF-03-2024-0180
Access Statistics for this article
Studies in Economics and Finance is currently edited by Prof Niklas Wagner
More articles in Studies in Economics and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().