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Understanding Bitcoin: Its role in asset price spillovers, responses to monetary policy and impact on global CO2 emissions / OLUWASEUN OLUWASINA
Swansea University Author: OLUWASEUN OLUWASINA
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PDF | E-Thesis – open access
Copyright: The author, Oluwaseun Iruoghene Daisy Oluwasina, 2024.
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DOI (Published version): 10.23889/SUthesis.68441
Abstract
In a world increasingly driven by technological advancements, cryptocurrencies emerge as a paradox: a beacon of financial innovation with significant environmental costs. This thesis explores Bitcoin's interactions with economic variables and its carbon footprint, aiming to uncover the broader...
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Swansea, Wales, UK
2024
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| Institution: | Swansea University |
| Degree level: | Doctoral |
| Degree name: | Ph.D |
| Supervisor: | Chowdhury, Rosen ; O’Leary, Nigel |
| URI: | https://cronfa.swan.ac.uk/Record/cronfa68441 |
| Abstract: |
In a world increasingly driven by technological advancements, cryptocurrencies emerge as a paradox: a beacon of financial innovation with significant environmental costs. This thesis explores Bitcoin's interactions with economic variables and its carbon footprint, aiming to uncover the broader implications of its disruptive presence in both financial markets and ecological sustainability. The first chapter investigates spillover effects between Bitcoin and traditional financial indices and volatility measures. Findings indicate that Bitcoin exhibits significant self-explained variance and minimal spillover from other markets. Despite failing to act as a traditional safe haven during market crises, Bitcoin's relative isolation underscores its unique role due to decentralisation. This contributes to understanding Bitcoin's stability and interconnectedness with broader financial markets, particularly during the COVID-19 pandemic. The second chapter explores the asymmetric impact of U.S. monetary policy on Bitcoin's price. Analysis reveals that Bitcoin prices react differently to monetary policy shocks depending on the interest rate regime. During high interest rates, Bitcoin prices experience substantial and prolonged declines, while the impact is less severe during low interest rates. Highlighting Bitcoin's sensitivity to monetary policy changes. The results suggest why and how cryptocurrencies fit into the asset-based channels of the monetary transmission mechanism. The final chapter assesses the long-run relationship between Bitcoin's carbon emissions and global carbon emissions. Findings establish a positive long-term cointegrating relationship between Bitcoin-related CO2 emissions and global CO2 levels. indicating that while Bitcoin's immediate impact is small, sustained mining could have significant long-term effects. |
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| Keywords: |
Cryptocurrency, Bitcoin, Bitcoin Electricity Consumption, CO2 emissions, Monetary Policy, Asset Price Spillovers, Safe Haven, Local Projections, Impulse Response Functions, TVP-VAR, SVECM |
| College: |
Faculty of Humanities and Social Sciences |