Bitcoin-Energy Markets Interrelationships - New Evidence

22 Pages Posted: 8 May 2020

See all articles by Shaen Corbet

Shaen Corbet

Dublin City University ; University of Waikato - Management School

Brian M. Lucey

Trinity Business School, Trinity College Dublin; Ho Chi Minh City University of Economics and Finance; Jiangxi University of Finance and Economics

Larisa Yarovaya

University of Southampton - Southampton Business School

Date Written: March 31, 2020

Abstract

The annual electricity consumption of cryptocurrency transactions has grown substantially in recent years, partially driven by the increasing difficulty in mining, but also driven by the large number of new market participants that have been attracted by the elevated prices of this developing financial asset. Total carbon production from mining now likely exceeds that generated by individual developed nations. This is now a prevailing and accepted feature in cryptocurrency markets, however unsustainable it may be. This paper investigates as to how Bitcoin's price volatility and the underlying dynamics of cryptocurrency mining characteristics affect underlying energy markets and utilities companies. Further analysis of potential side-effects within the market for Exchange Traded Funds are considered. The results show a sustained and significant influence of cryptocurrency energy-usage on the performance of some companies in the energy sector as separated by jurisdiction, emphasising the importance of further assessment of environmental impacts of cryptocurrency growth. Robustness testing presents evidence that dynamic correlations peaked during the sharp Bitcoin price appreciation of late-2017 as investors re-evaluated how this increased energy usage would influence the profitability of utility companies.

Keywords: Bitcoin, Cryptocurrencies, Volatility, Speculative Assets, Currencies, Energy Usage

JEL Classification: G10, Q43

Suggested Citation

Corbet, Shaen and Lucey, Brian M. and Yarovaya, Larisa, Bitcoin-Energy Markets Interrelationships - New Evidence (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3565085 or http://dx.doi.org/10.2139/ssrn.3565085

Shaen Corbet

Dublin City University ( email )

Dublin 9
Ireland

University of Waikato - Management School ( email )

Hamilton
New Zealand

Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

Ho Chi Minh City University of Economics and Finance ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Jiangxi University of Finance and Economics ( email )

South Lushan Road
Nanchang, Jiangxi 330013
China

Larisa Yarovaya

University of Southampton - Southampton Business School ( email )

Highfield
University Road
Southampton, SO17 1BJ
United Kingdom

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