Bitcoin mining activity and volatility dynamics in the power market

11 Pages Posted: 5 Oct 2021

See all articles by Sayar Karmakar

Sayar Karmakar

University of Florida

Riza Demirer

Southern Illinois University Edwardsville - Department of Economics & Finance; Economic Research Forum (ERF)

Rangan Gupta

University of Pretoria - Department of Economics

Date Written: October 1, 2021

Abstract

Utilizing a measure of the Bitcoin network's daily electricity load, we document a signifcant volatility effect of Bitcoin mining activity in three prominent electricity markets in the U.S. The volatility effect is found to be increasing over time, particularly with the widespread lockdowns enforced due to the COVID-19 pandemic. The fndings provide novel insight to the non-virtual side of mining and trading of cryptocurrencies and underscore the need for establishing mechanisms to prevent possible destabilizing effects of this growing industry, both from a power consumption and carbon emissions perspective.

Keywords: Time-varying, GARCH, Bitcoin, Electricity returns

JEL Classification: C32, C53, Q4

Suggested Citation

Karmakar, Sayar and Demirer, Riza and Gupta, Rangan, Bitcoin mining activity and volatility dynamics in the power market (October 1, 2021). Available at SSRN: https://ssrn.com/abstract=3934561 or http://dx.doi.org/10.2139/ssrn.3934561

Sayar Karmakar

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Riza Demirer (Contact Author)

Southern Illinois University Edwardsville - Department of Economics & Finance ( email )

Department of Economics & Finance
Alumni Hall 3145
Edwardsville, IL 62026-1102
United States
(618) 650-2939 (Phone)
(618) 650-3047 (Fax)

HOME PAGE: http://www.siue.edu/~rdemire/

Economic Research Forum (ERF)

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Cairo, Cairo
Egypt

HOME PAGE: http://erf.org.eg/affiliates/riza-demirer-3/

Rangan Gupta

University of Pretoria - Department of Economics ( email )

South Africa

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