The Financial Market Effects of Cryptocurrency Energy Usage

Abstract

Annual electricity consumption for cryptocurrency mining is growing yearly, driven by the increasing difficulty in mining. Total carbon production from mining now likely exceeds that generated by the entire nation of Portugal. This is a feature, not a bug, in cryptocurrencies. This paper investigates how Bitcoin's price volatility and the underlying dynamics of cryptocurrency's mining characteristics affect the energy markets, utilities companies, and green ETFs. The results show that continued cryptocurrency energy-usage impacts the performance of energy sector, which emphasises the importance of further assessment of environmental impacts of cryptocurrency growth.

Keywords: Cryptocurrency, mining, electricity, energy

JEL Classification: G00