Weak Regulatory Frameworks

Since the advent of bitcoin in 2009, the use of cryptocurrencies has increased significantly. Estimates
suggest that 106 million people (roughly 1.3% of the global population) have used bitcoin at least once
[1]. Others suggest there are around 25 million ‘active’ cryptocurrency users [2]. Maintenance of the
bitcoin network requires significant material resources. As of November 2021, bitcoin is using more
energy than the whole of Thailand (around 190 TWh), the majority of which is generated from fossil fuels
[3], emitting approximately 90 Mt CO 2e per year [4]. This is up from around 22 Mt CO 2e annually just
two years ago [5]. This now significantly exceeds the carbon emissions produced by the gold mining
industry [6]. Today, a single Bitcoin transaction has an electrical energy footprint roughly equal to the
total energy consumed by a US household for two months [7] 1. The cryptocurrency is unsustainable by
design. In producing new bitcoins, using large amounts of electrical energy is incentivised through a
process known as Proof-of-Work (PoW) mining. The PoW consensus protocol is an intentionally energy-
inefficient mechanism designed to promote behaviour in the interest of the network, whilst securing a
blockchain from bad-actor interference [8]. With such a significant and growing footprint, PoW
cryptocurrencies, like bitcoin, are threatening global commitments for mitigating carbon emissions [9].
Predictions suggest the network could be responsible for emitting upto 131 Mt CO 2e per year in the mid-
term [10], [11]. Bitcoin’s growing energy footprint correlates strongly with its dollar value, but even
without the forecasted growth, PoW mining already has consequences for human health and climate.
Research indicates that for every $1 of value created by Bitcoin’s energy use, $0.49 needs to be spent on
mitigating the network’s associated environmental issues and remedying other associated public health
problems [12].
There is near-unanimous consensus in the academic literature asserting that PoW cryptocurrencies cause
significant challenges for meeting global sustainable development goals. However, some argue the
technology offers opportunities for helping towards poverty reduction globally, enabling strong political
institutions [13], providing clear property rights, and tackling corruption [14], whilst promoting
entrepreneurialism and equal opportunities [15]. In this paper we show how PoW cryptocurrencies
disproportionately impact vulnerable and developing communities globally, where PoW miners and other
actors take advantage of economic instabilities, weak regulations, and access to cheap energy and other
resources. Around 1 third of PoW miners are currently in countries with a Human Development Index
(HDI) score below 0.85 [16]. Some of the world’s poorest and most vulnerable people are likely to be
those disproportionately impacted by PoW mining’s local social and environmental issues (see Fig. 1) 2.
Combined with the most optimistic climate scenarios for the end of the century, bitcoin’s growth and
inefficiency will likely play a significant part in placing the poorest parts of the world at the threshold of
catastrophe [18]. Several provincial bitcoin mining bans across China in 2021, including Inner Mongolia,
Xinjiang, Yunnan and Sichuan provinces, have forced much of the country’s mining infrastructure to
relocate. The bans followed a nationwide crackdown imposed due to safety and climate change concerns
from associated coal mining activities [19]. Where Chinese mining operations relocate to developing
countries, for example towards less politically stable ex-soviet borderlands, electricity supplies are often
accessed illicitly, fuelling conflict over resources [20]. The exodus is also impacting opportunities for
sustainable livelihoods, for example in Democratic Republic of Congo (DRC) where local people are
outcompeted by bitcoin miners for access to cheap renewable energy [21]. As mining operations use vast
amounts of highly specialised and short-lived hardware, obsolete equipment is likely to cause additional
damage to the environment and human health, especially in developing areas where much of this
hazardous electronic waste (e-waste) is disposed [22].
Without robust regulation, bitcoin’s increasing price and associated level of adoption will continue to
cause harm globally. To mitigate these impacts, this paper considers the challenges in developing
potential regulatory pathways for effective social-environmental management of bitcoin and other PoW
cryptocurrencies. Histories of colonialism, including imposition of neoliberal structural reforms, have
placed many vulnerable communities at the frontier of cryptocurrency production [23], [24], [25].
Economic instability, inadequate tax policy frameworks, and weak regulatory institutions are also
encouraging increased levels of adoption within communities with the least resilience towards both
economic and climatic shocks [24].

The following section offers a short introduction to PoW mining, before discussing the challenges and
trade-offs in relation to 4 potential pathways for regulating it. These pathways include: 1) promoting
voluntary private-sector commitments to mining with only renewable energy, 2) encouraging a system of
voluntary carbon offsetting for miners and users of PoW cryptocurrencies, 3) using existing financial
regulations and tax frameworks, and 4) imposing national and/or international bans on PoW mining. The
paper concludes by summarising the key social and environmental benefits of effective action.

Proof-of-work / proof-of-waste
PoW cryptocurrencies, like bitcoin, rely on a global network of several million competing
specialist computers [26]. These bitcoin miners, like safe-crackers, repeatedly guess the
combination to a digital lock (a long string of digits) with the computer guessing the correct
combination winning an ever-decreasing number of new bitcoins. The combination changes as
miners successfully create new blocks, every ten minutes on average. The number of bitcoins
released with each new block halves every

Voluntary private-sector commitments to PoW mining with

renewable energy
In April 2021, with the endorsement of the UN High-Level Climate Champions, a Crypto
Climate Accord was voluntarily established by 3 companies advocating profitable innovations
for financial regulation, energy and resource efficiency [36]. The founders had all adopted a
critical stance towards government regulation that could bring about significant costs for
financial technology companies.
PoW mining with voluntary carbon offsetting
Voluntary options have also been established for cryptocurrency exchanges and third-party
intermediaries. Personal carbon footprint calculators and offsetting websites have been around
for some time, though several specialist brokering sites have recently offered offsetting services
specifically for PoW cryptocurrency investors. Examples include Impact Scope8, which allows
investors the opportunity to donate funds using Bitcoin or Litecoin to finance forest conservation

Using existing financial regulation and tax frameworks

Truby [9] argues that more mandatory fiscal tools can effectively provide the incentives required
to promote behavioural modifications among blockchain developers and PoW miners to reduce
energy consumption. These environmental tools could occur while governments impose ‘Anti-
Money Laundering’ (AML) / ‘Know Your Client’ (KYC) requirements for crypto exchanges that
could ultimately negate the privacy use case for many PoW cryptocurrencies, lowering their
market value and disincentivising their

Banning PoW cryptocurrencies

Unlike voluntary mechanisms, national and international bans tackle the drivers of anthropogenic
CO2 emissions associated with PoW mining. At the time of writing, a number of countries have
banned the holding of any cryptocurrencies, including Egypt, Morocco, and Bolivia. China has
banned Bitcoin mining on explicitly environmental grounds. However, this has had adverse
impacts in other countries, including coal rich areas of Kazakhstan where purpose-built coal-
fired power plants have been

Conclusions: social and environmental benefits for

regulating PoW mining
PoW is a blockchain consensus protocol that allows the decentralised networks behind some
cryptocurrency projects to agree account balances and the order of transactions. PoW also
ensures that blockchains are difficult to attack or overwrite. However, the amount of energy
required to run PoW cryptocurrencies as well as the energy mix of PoW mining operations, make
them highly polluting. They are also difficult to scale without third party applications, sacrificing
aspects of their decentralised 
 Conflicts

During the past decade, financial instability and geopolitical events have exacerbated the return of the
traditional non-renewable energy and precious metals markets due to certain unavoidable circumstances,
such as the Russia-Ukrainian war (2014), the Paris terror attacks (2015), military tensions between the
USA and Iran (2020), and again Russia –Ukraine conflict (2022). In contrast, there are also risks of
financial instability, of which the most important events were the COVID-19 pandemic. It has severely
damaged the global economy, including commodities prices. Traditional energy worldwide has
significantly decreased (Glob. Energy Rev. 2020, 2020; Kang et al., 2021). Furthermore, energy prices
climbed substantially again after the Russian invasion of Ukraine on February 24, 2022, when the global
economy began to recover from the Covid-19 pandemic. Likewise, the conflict in Ukraine caused a
significant shock to primary traditional non-renewable energy resources and precious metals. It altered
the global trade, production, and consumption patterns to keep prices at historically high levels until the
end of 2024 (World Bank Report, 2022). It has already been seen that the strength of the turmoil in the
primary commodity markets can generally lead to adverse outcomes through their impact on the global
economy's financial stability. Moreover, the Russian invasion of Ukraine has brought the concern of
energy security back to the fore and given huge imputes on the non-renewable energy and precious metals
markets.

In light of the facts set out above, studying the impact of geopolitical tensions and financial instability has
become even more critical. We select the Geopolitical risk (GPR) index from (Caldara and Iacoviello,
2018, 2022). Extensive new literature analyzed the effect of the geopolitical risk index on economic
variables such as GDP growth (Akadiri et al., 2020; Xue et al., 2022), trade flow (Gupta et al., 2019),
unemployment rates (Eksi and Onur Tas, 2022), inflation (Azad and Serletis, 2021; Haque and
Magnusson, 2021), financial markets (Chiang, 2022; Jiao et al., 2022; Pástor and Veronesi, 2012). Most
recent scholars have highlighted the effect of the GPR on energy and metal prices (Gong and Xu, 2022;
Li et al., 2021a, 2021b; C. W. Su et al., 2019; Umar et al., 2022). Therefore, we consider the St Louis Fed
Financial Stress Index (STLFSI3), which represents the fluctuation in the return of financial markets.
Several studies used the STLFSI to quantify the effect of financial Instability (FSI) on stock and
commodities changes (District, 2015; Gkillas et al., 2020; Hong et al., 2022a; Illing and Liu, 2006; Wan
and Kao, 2015; Saâdaoui et al., 2022). However, the effect of the Russia-Ukrainian war on the
commodity markets has more attention that Russia is a significant exporter and player in the global non-
renewable energy and precious metals. In the last few months of 2022, relatively limited studies have
been devoted to assessing the effect of the uncertainty risk indices of the Russia-Ukrainian conflict on
non-renewable energy and precious metals during geopolitical risk and financial instability.

Moreover, Bedowska-Sojka et al. (2022) focus on the investment tool and use the wavelet coherence
method to check whether geopolitical risk as a proxy for the Russia-Ukrainian war can act as a hedge
against different assets prices, including oil, gold, and silver. Umar et al. (2022) generated the GPR to
examine the Russian evasion of Ukranian on global assets, including oil, gas, and gold. They document
mixed relationships on the quantile on quantile regression under different market conditions (bearish,
normal, and bullish). Adekoya et al. (2022) establish a strong connectedness between financial assets
during the Russia-Ukrainian war compared to the pre-war. It also concludes that oil is a net transmitter of
the shock to other financial and commodities markets. The Russia-Ukrainian war increased financial
instabilities that again affected commodity prices. Financial Instability influences energy and metal
markets through fluctuations in returns and vice versa (Nazlioglu et al., 2015). We offer four
contributions to the literature. First, unlike the previous research, Ramiah et al. (2019), Abdel-Latif and
El-Gamal (2020), Alqahtani et al. (2020), Smales (2021), and Tiwari et al. (2021) where they have
measured relationships between the commodity market and terrorist attacks, volatility of geopolitical risks
and financial commodities like precious metals (Baur and Smales, 2020; Huang et al., 2021; Yilanci, and
Kilci, 2021) and agricultural commodities (Tiwari et al., 2021). The current study investigates how
geopolitical risks and financial instability impact non-renewable energy and precious metals. The research
has discussed the effect of the Russia-Ukrainian conflict generated by geopolitical risk with non-
renewable energy and precious metals. In addition, scarce studies are devoted to assessing the relationship
between financial instability and metals markets. To the best of the authors’ knowledge, this is the first
study focused on examining the impact of the GPR and financial Instability (FSI) on traditional non-
renewable energy and precious metals. Moreover, this work compares the effect of GPR and FSI
connectedness on non-renewable energy and precious metals.

Second, the authors propose to analyze the dynamic connectedness of popular spillover measures
developed by (Antonakakis and Gabauer, 2017) that extend the work of (Diebold and Yilmaz, 2014). The
framework of the TVP-VAR can reasonably identify the connectedness of the return spillover at time-
varying (Antonakakis and Gabauer, 2017; Diebold and Yilmaz, 2014; Mokni et al., 2020). We also
robustness check by using the wavelet coherence methods involving time-varying and depending on time-
frequency, allowing us to decompose returns series to detect causality direction and co-movement degree
(Goodell and Goutte, 2021; Yousfi et al., 2021; Zhang et al., 2022).

Third, our study is not limited to the COVID-19 pandemic, when prices of different commodities,
including precious metals, were adversely affected (Mokni et al., 2021; Umar et al., 2021; Iqbal et al.,
2022). In comparison, we have taken a period of the Russia and Ukraine conflict and demonstrated how
spillovers of non-renewable energy and precious metals evolved while the geopolitical crisis between
Russia and Ukraine. Our empirical investigation shows the first evidence of the collective and
comprehensive impacts of geopolitical risks and financial instability during the COVID-19 pandemic and
the Russia –Ukraine war on non-renewable energy and precious metals. We highlight that the risk
spillover of GPR connectedness is relatively more minor than the FSI. Further, examining the effect of
the uncertainty indices on energy and metal prices during the Russian- Ukrainian conflict exhibits urgent
attention to be a guide and contribution for the firms, monetary policymakers and governments, and
international institutions.

Furthermore, this paper is motivated to investigate the connectedness and check the investment property.
This study examines whether non-renewable energy and precious metals can act as a hedge, a haven, or a
diversification tool against GPR and FSI. In doing so, we extend the recent literature by providing an
updated analysis that employs the Russia-Ukraine conflict for more than 90 days. By contrast, the
previous studies test the connectedness for less than one month.

During the past decade, financial instability and geopolitical events have exacerbated the return of the
traditional non-renewable energy and precious metals markets due to certain unavoidable circumstances,
such as the Russia-Ukrainian war (2014), the Paris terror attacks (2015), military tensions between the
USA and Iran (2020), and again Russia –Ukraine conflict (2022). In contrast, there are also risks of
financial instability, of which the most important events were the COVID-19 pandemic. It has severely
damaged the global economy, including commodities prices. Traditional energy worldwide has
significantly decreased (Glob. Energy Rev. 2020, 2020; Kang et al., 2021). Furthermore, energy prices
climbed substantially again after the Russian invasion of Ukraine on February 24, 2022, when the global
economy began to recover from the Covid-19 pandemic. Likewise, the conflict in Ukraine caused a
significant shock to primary traditional non-renewable energy resources and precious metals. It altered
the global trade, production, and consumption patterns to keep prices at historically high levels until the
end of 2024 (World Bank Report, 2022). It has already been seen that the strength of the turmoil in the
primary commodity markets can generally lead to adverse outcomes through their impact on the global
economy's financial stability. Moreover, the Russian invasion of Ukraine has brought the concern of
energy security back to the fore and given huge imputes on the non-renewable energy and precious metals
markets.

In light of the facts set out above, studying the impact of geopolitical tensions and financial instability has
become even more critical. We select the Geopolitical risk (GPR) index from (Caldara and Iacoviello,
2018, 2022). Extensive new literature analyzed the effect of the geopolitical risk index on economic
variables such as GDP growth (Akadiri et al., 2020; Xue et al., 2022), trade flow (Gupta et al., 2019),
unemployment rates (Eksi and Onur Tas, 2022), inflation (Azad and Serletis, 2021; Haque and
Magnusson, 2021), financial markets (Chiang, 2022; Jiao et al., 2022; Pástor and Veronesi, 2012). Most
recent scholars have highlighted the effect of the GPR on energy and metal prices (Gong and Xu, 2022;
Li et al., 2021a, 2021b; C. W. Su et al., 2019; Umar et al., 2022). Therefore, we consider the St Louis Fed
Financial Stress Index (STLFSI3), which represents the fluctuation in the return of financial markets.
Several studies used the STLFSI to quantify the effect of financial Instability (FSI) on stock and
commodities changes (District, 2015; Gkillas et al., 2020; Hong et al., 2022a; Illing and Liu, 2006; Wan
and Kao, 2015; Saâdaoui et al., 2022). However, the effect of the Russia-Ukrainian war on the
commodity markets has more attention that Russia is a significant exporter and player in the global non-
renewable energy and precious metals. In the last few months of 2022, relatively limited studies have
been devoted to assessing the effect of the uncertainty risk indices of the Russia-Ukrainian conflict on
non-renewable energy and precious metals during geopolitical risk and financial instability.

Moreover, Bedowska-Sojka et al. (2022) focus on the investment tool and use the wavelet coherence
method to check whether geopolitical risk as a proxy for the Russia-Ukrainian war can act as a hedge
against different assets prices, including oil, gold, and silver. Umar et al. (2022) generated the GPR to
examine the Russian evasion of Ukranian on global assets, including oil, gas, and gold. They document
mixed relationships on the quantile on quantile regression under different market conditions (bearish,
normal, and bullish). Adekoya et al. (2022) establish a strong connectedness between financial assets
during the Russia-Ukrainian war compared to the pre-war. It also concludes that oil is a net transmitter of
the shock to other financial and commodities markets. The Russia-Ukrainian war increased financial
instabilities that again affected commodity prices. Financial Instability influences energy and metal
markets through fluctuations in returns and vice versa (Nazlioglu et al., 2015). We offer four
contributions to the literature. First, unlike the previous research, Ramiah et al. (2019), Abdel-Latif and
El-Gamal (2020), Alqahtani et al. (2020), Smales (2021), and Tiwari et al. (2021) where they have
measured relationships between the commodity market and terrorist attacks, volatility of geopolitical risks
and financial commodities like precious metals (Baur and Smales, 2020; Huang et al., 2021; Yilanci, and
Kilci, 2021) and agricultural commodities (Tiwari et al., 2021). The current study investigates how
geopolitical risks and financial instability impact non-renewable energy and precious metals. The research
has discussed the effect of the Russia-Ukrainian conflict generated by geopolitical risk with non-
renewable energy and precious metals. In addition, scarce studies are devoted to assessing the relationship
between financial instability and metals markets. To the best of the authors’ knowledge, this is the first
study focused on examining the impact of the GPR and financial Instability (FSI) on traditional non-
renewable energy and precious metals. Moreover, this work compares the effect of GPR and FSI
connectedness on non-renewable energy and precious metals.

Second, the authors propose to analyze the dynamic connectedness of popular spillover measures
developed by (Antonakakis and Gabauer, 2017) that extend the work of (Diebold and Yilmaz, 2014). The
framework of the TVP-VAR can reasonably identify the connectedness of the return spillover at time-
varying (Antonakakis and Gabauer, 2017; Diebold and Yilmaz, 2014; Mokni et al., 2020). We also
robustness check by using the wavelet coherence methods involving time-varying and depending on time-
frequency, allowing us to decompose returns series to detect causality direction and co-movement degree
(Goodell and Goutte, 2021; Yousfi et al., 2021; Zhang et al., 2022).
Third, our study is not limited to the COVID-19 pandemic, when prices of different commodities,
including precious metals, were adversely affected (Mokni et al., 2021; Umar et al., 2021; Iqbal et al.,
2022). In comparison, we have taken a period of the Russia and Ukraine conflict and demonstrated how
spillovers of non-renewable energy and precious metals evolved while the geopolitical crisis between
Russia and Ukraine. Our empirical investigation shows the first evidence of the collective and
comprehensive impacts of geopolitical risks and financial instability during the COVID-19 pandemic and
the Russia –Ukraine war on non-renewable energy and precious metals. We highlight that the risk
spillover of GPR connectedness is relatively more minor than the FSI. Further, examining the effect of
the uncertainty indices on energy and metal prices during the Russian- Ukrainian conflict exhibits urgent
attention to be a guide and contribution for the firms, monetary policymakers and governments, and
international institutions.

Furthermore, this paper is motivated to investigate the connectedness and check the investment property.
This study examines whether non-renewable energy and precious metals can act as a hedge, a haven, or a
diversification tool against GPR and FSI. In doing so, we extend the recent literature by providing an
updated analysis that employs the Russia-Ukraine conflict for more than 90 days. By contrast, the
previous studies test the connectedness for less than one month.

Armed conflicts weaken the ability of nations, households and individuals to secure their food needs.
These conflicts can impede activities that aim to grow and harvest, process and transport, and supply and
market food. More specifically, conflicts can affect the capacity of food systems and supply chains to
function appropriately: production declines owing to producers being engaged in war, unable to produce
or fleeing the country; agricultural inputs are disrupted on foreign markets; or agricultural yields and
water infrastructure are destroyed by military operations. Armed conflicts can also affect the capacity of
consumers to access sufficient food, because of their declining purchasing power or the food availability
problem. Such conflicts increase food prices on local and international markets with negative effects for
food-importing, low-income countries; disrupt energy markets with negative effects on the energy and
food purchasing power of importing countries; and affect the capacity of international food aid to meet
growing food needs in times of crisis. Therefore, these food challenges currently present a key feature of
armed conflicts, which should be considered in any approach used during the conflict management
process.

The upheaval caused by the current Russia–Ukraine war, with all the human security implications this
may entail, comes on the heels of preexisting challenges that have already put pressure on prices and
supply chains; the COVID-19 pandemic, an energy crisis, shipping constraints and recent climate-induced
extreme events3. After a decline during the past decade, global hunger is rising again1 and the ongoing
war is expected to increase this trend (experts estimate that 7.6 to 13.1 million people are threatened 4).
This will surely compromise the achievements made in the area of food security over the past decade,
including through the Sustainable Development Goals.

Russia and Ukraine produce nearly 30% of the world’s traded wheat and 12% of its calories 5,6. However,
the conflict has disrupted the export of wheat, corn and barley from these countries, and a large portion of
the world’s supply of fertilizers is caught up in Russia and Belarus. As a result, food and fertilizer prices
have skyrocketed3, and this may affect every farmer on Earth this year, and into the foreseeable future5.
The volatility of major food commodities and fertilizers (Fig. 1) poses a distinct threat as it induces
greater market uncertainty, which may affect production decisions and spur speculative behaviours3. This
is compounded by intensive competition on the global food market triggered by the circumstances of two
key players (China and India), whose foreign food demand is on the rise3.
As the war in Ukraine continues, Human Rights Watch has been busy investigating what’s happening
on the ground – including scrutinizing the weapons being used in the conflict. Under the laws of war,
parties to the conflict must do everything feasible to protect civilians. But certain weapons, some
spotted or used in Ukraine, make this impossible. Associate director and arms researcher Mark Hiznay
speaks with Amy Braunschweiger on what he’s seeing in Russian’s invasion of Ukraine.

On one hand we’re seeing the whole range of 70s and 80s vintage
Soviet weapons that Russian and Ukrainian forces inherited. We’re
seeing the use of some new types of weapons, particularly on the
Ukrainian side with armed drones and certain guided missiles. Russia
has also used some of their most advanced guided weapons and has
used older weapons in a novel way, for example using a naval missile
designed to destroy ships on an inland target.

And there is a lot of brute force with high explosives that hasn’t
changed in decades.

Since the start of its invasion nearly a year ago, Russia has repeatedly
warned that Ukraine might be preparing to use non-conventional
weapons, including biological weapons or a radioactive dirty bomb. No
such attack has materialised.

Ukraine and its Western allies rejected those accusations but saw
them as a possible prelude to a "false flag" attack, meaning Russia
might itself resort to such tactics but seek to blame Ukraine. Russia
has dismissed that claim.
Ukraine's Armed Forces, in the statement, accused Russia of using
"banned phosphorus and chloropicrin ammunition" and of using
"disinformation as a weapon."

Hybrid warfare