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Energy Consumption and Bitcoin Market

A Correction to this article was published on 18 June 2021

This article has been updated

Abstract

This paper is the first empirical paper to study the relationship between Bitcoin energy consumption and its market. Using the variance decompositions in combination with realized semi-variances for daily data, we find a relationship between Bitcoin energy consumption and its returns as well as volumes. Additionally, the directional impact from Bitcoin trading volumes to its energy consumption is higher than returns in the long run. The second Bitcoin crash also induces a higher connectedness of energy usage. Finally, we found the predictive power of energy on Bitcoin returns and volume. It holds true for the opposite predictive direction. Our results draw a challenge to the cryptocurrency ecosystems to sustainably innovate to impede their carbon footprint.

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Change history

Notes

  1. After taking the Vector Auto-regression (VAR) based on the optimal lag selection (from the criteria of AIC, HQIC, SBIC of 4 periods), we estimate the Granger causality.

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Correspondence to Duy Duong.

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Huynh, A.N.Q., Duong, D., Burggraf, T. et al. Energy Consumption and Bitcoin Market. Asia-Pac Financ Markets 29, 79–93 (2022). https://doi.org/10.1007/s10690-021-09338-4

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