Environmental News and Bitcoin Market Dynamics: An Event Study of Global Climate-Related Shocks

Abstract

The environmental footprint of cryptocurrency networks, particularly the electricity-intensive Bitcoin (BTC) blockchain, has raised growing concern among policymakers, investors, and environmental organizations. This study examines how major global environmental events and climate policy announcements influence Bitcoin’s return and risk dynamics, linking digital asset markets to sustainability debates. Thirteen events between 2010 and 2024—including multilateral agreements (e.g., the Paris Agreement), COP summits, extreme weather disasters, and national policy interventions—are analyzed using an event study framework integrated with the Capital Asset Pricing Model (CAPM) and GARCH-based volatility modelling. We hypothesize that highly visible policy events generate stronger short-run abnormal returns than climate disasters, while disasters produce more persistent effects on volatility. Results confirm this distinction: events such as the U.S. Paris Agreement withdrawal triggered immediate and significant reactions, whereas major weather disasters induced longer-term volatility adjustments. While overall systematic risk remained stable, event-specific responses revealed shifts in Bitcoin’s sensitivity to global equity markets. Climate-related signals shape speculative digital asset markets, with implications for sustainable finance, climate risk assessment, and regulatory policy design. Climate-related news can shape investor perceptions of energy-intensive digital assets, with implications for environmental policy design, sustainable finance strategies, and climate risk assessment. For policymakers, the results highlight the potential of environmental signals to influence speculative markets, supporting the case for integrating financial market behaviour into environmental management and regulatory planning.