Bitcoin growth amid climate change: Policy and investment implications
Abstract
Bitcoin contributes to global carbon emissions on a scale comparable to entire countries in order to secure its decentralized network. This exposes Bitcoin to climate policies aimed at reducing emissions. This paper develops a general equilibrium framework to examine how the stringency of climate policy affects Bitcoin’s valuation and its relationship with the equity market. Our theoretical analysis delivers a key insight: a transition from a lenient to a stringent climate policy increases the conditional correlation between Bitcoin and equity returns, thereby compromising Bitcoin’s appeal as a hedge or diversifier against equity market volatility. Empirical evidence supports this theoretical prediction.
Fields of Study & Subjects
Blockchain Technology Applications and Security
Energy
Environment
and Transportation Policies
Market Dynamics and Volatility
Publication details
- Journal / source
- Journal of Environmental Economics and Management
- Publisher
- Elsevier BV
- Volume
- 139
- Pages
- 103351–103351
- Publication date
- 12 May 2026
- Language
- EN