The Sustainability and Profitability of Bitcoin Mining: A Time-Varying Granger Causality Approach

14 Pages Posted: 14 Sep 2019

See all articles by Chunlin Lang

Chunlin Lang

Zhengzhou University

Yang Hu

School of Accounting, Finance and Economics, University of Waikato

Les Oxley

University of Waikato - Department of Economics and Finance

Yang Hou

School of Accounting, Finance and Economics,, Waikato Management School, University of Waikato

Date Written: September 5, 2019

Abstract

In this paper, we investigate the Granger causal relationships between Bitcoin mining, mining profitability and sustainability (the resultant energy consumption and electronic waste), where importantly we allow such relationships to varying over time. We consider three questions relevant to energy-usage, environmental and investors' perspectives. We find that increased mining difficulty not only has a significant effect on the power consumption used for Bitcoin mining from late 2018 to the middle of 2019 but also Granger causes the electronic waste generated from mining from January/February 2018 to April 2019. Moreover, we provide an explanation of why the deployment of massive computer power in mining for Bitcoin as the hash rate Granger causes miners' revenues during the entire sample period 2013-19.

Keywords: Bitcoin mining, Energy consumption, Sustainability, Granger causality

JEL Classification: C5, G10, Q40, Q56

Suggested Citation

Lang, Chunlin and Hu, Yang and Oxley, Les and Hou, Yang, The Sustainability and Profitability of Bitcoin Mining: A Time-Varying Granger Causality Approach (September 5, 2019). Available at SSRN: https://ssrn.com/abstract=3448837 or http://dx.doi.org/10.2139/ssrn.3448837

Chunlin Lang

Zhengzhou University ( email )

100 Science Avenue
Zhengzhou, Henan 450001
China

Yang Hu

School of Accounting, Finance and Economics, University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Les Oxley (Contact Author)

University of Waikato - Department of Economics and Finance ( email )

Private Bag 3105
Hamilton, 3105
New Zealand

Yang Hou

School of Accounting, Finance and Economics,, Waikato Management School, University of Waikato ( email )

Private Bag 3105
Hamilton, 3240
New Zealand

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