Decentralized finance applications and electricity consumption, carbon dioxide emission, price relationship of crypto assets after the merge: an application on selected coins and tokens

Decentralized finance, which is an area where technological developments manifest themselves with the effect of digitalization, is gaining a place in human life day by day and attracts a lot of attention with the advantages offered by its applications. However, the increase in the use of crypto assets in recent years; This new technology, which offers many advantages such as convenience, transparency, speed and promises profit, has also brought environmental impacts and potential risk problems. Based on this situation, in this study, first of all, decentralized finance and its applications are introduced and in order to investigate the environmental effects of crypto assets, the relationship between electricity consumption, CO2 emission and price variables is analyzed econometrically after the merge application, which represents Ethereum's transition to the Proof of Stake protocol to eliminate the high energy consumption problem in the Proof of Work protocol. In this study, time series consisting of daily data between the periods of 22.09.2021 and 09.09.2023 were examined separately before and after the merge. Fourier Granger and Fourier Toda-Yamamoto causality tests were used to examine the causality relationship of time series, and Fourier ARDL Bounds Test and Fourier ADL Cointegration Test were used to analyze the cointegration relationship. According to the findings obtained in the study, the fact that the causality and cointegration relationship emerged in Bitcoin in both the before and after the merge periods can be explained by the use of the Proof of Work mechanism, while the absence of a causality and cointegration relationship in Ethereum after the merge can be explained by the disappearance of the relationship between the variables after the merge with the Proof of Stake mechanism. It is thought that the differences in the analysis results on the token side may be due to the difference in investor perception of each asset. In addition, the fact that there is no causality or cointegration relationship between the variables in the after the merge period on the Ethereum side can be interpreted as an indication that the Proof of Stake protocol is effective and that an environmentally friendly crypto asset that causes less energy consumption is possible. In this sense, it can be interpreted that the decentralized ecosystem can solve the problem of high energy consumption in alternative methods that eliminate intense energy consumption.