Examining the Causal Relationship Between Cryptocurrencies and Energy Consumption in D8 Countries: A Bootstrap Panel Granger Causality Approach

Najmeh  Arsalan; Zohreh Tabatabaei Nasab; Seyed Yahya  Abtahi; Mohammadali  Dehghan Tafti

Authors

Najmeh Arsalan Ph.D. student, Department of Finance, Ya.C., Islamic Azad University, Yazd, Iran Author https://orcid.org/0009-0002-3826-1321
Zohreh Tabatabaei Nasab Department of Economics, Ya.C., Islamic Azad University, Yazd, Iran https://orcid.org/0000-0003-3043-0151
Seyed Yahya Abtahi Department of Finance, Ya.C., Islamic Azad University, Yazd, Iran Author https://orcid.org/0000-0002-4034-5439
Mohammadali Dehghan Tafti Department of Finance, Ya.C., Islamic Azad University, Yazd, Iran Author https://orcid.org/0009-0005-2641-1793

Keywords:

cryptocurrency, energy consumption, bootstrap panel causality, comparative institutional analysis, D8 countries, mixed-methods methodology

Abstract

The exponential growth of the cryptocurrency market has raised increasing concerns regarding its environmental consequences, particularly energy consumption. The existing literature has predominantly focused on energy-intensive cryptocurrencies while overlooking the asymmetric effects of non-energy-intensive cryptocurrencies and the moderating role of institutions in developing countries. Using a mixed-methods approach, this study examined the causal relationship between energy-intensive and non-energy-intensive cryptocurrencies and energy consumption in D8 countries over the 2015–2024 period. In the quantitative phase, following second-generation diagnostic tests, the Kónya bootstrap panel causality test and Seemingly Unrelated Regression (SUR) estimation were employed. In the qualitative phase, comparative institutional analysis was used to interpret the findings. The results revealed profound structural heterogeneity. Causality running from Bitcoin to energy consumption was confirmed in Iran (subsidy-based), Malaysia (market-oriented), and Nigeria (inflation-hedging), whereas the direction of causality was reversed in Türkiye, Indonesia, and Bangladesh. No significant causal relationship was observed in Egypt or Pakistan. For the first time, the paradox of non-energy-intensive cryptocurrencies was documented: these cryptocurrencies affected energy consumption through indirect channels—namely, digital ecosystem development and complementarity with energy-intensive cryptocurrencies—in countries characterized by low energy efficiency. The share of fossil fuels exhibited the largest coefficient in the energy consumption equation. The cryptocurrency–energy nexus in developing countries is therefore highly context-dependent and contingent upon institutional structures. A “one-size-fits-all” policy approach is rejected, and policymakers should adopt differentiated strategies based on the proposed typology—cryptocurrency-driven, energy-driven, and disconnected systems. The findings also challenge the “green cryptocurrency” narrative and underscore the necessity of evaluating the entire life cycle of the digital ecosystem in energy policymaking.

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