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Sustainable energy practices and cryptocurrency market behavior

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  • Ben Omrane, Walid
  • Saadi, Samir
  • Savaser, Tanseli

Abstract

We examine the effects of energy usage on the return, volatility and jump processes in the Bitcoin (BTC) and Ethereum (ETH) markets. Our main finding indicates that while BTC returns respond significantly to changes in electricity consumption, the effect of electricity consumption on ETH returns is negligible. We attribute this discrepancy to BTC's relative energy inefficiency, which contrasts with ETH's commitment to transitioning to a more energy-efficient mining protocol over our sample period. Additionally, we show that the effect of electricity consumption on cryptocurrencies is mitigated by media coverage and policy uncertainty regarding the state of the economy, environment, and cryptocurrency markets. Our results suggest that when trading cryptocurrencies, investors consider their relative energy efficiency and price electricity consumption differently, highlighting the influence of the transition towards more sustainable energy practices on investor preferences and investment decisions in cryptocurrency markets.

Suggested Citation

  • Ben Omrane, Walid & Saadi, Samir & Savaser, Tanseli, 2024. "Sustainable energy practices and cryptocurrency market behavior," Energy Economics, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324006455
    DOI: 10.1016/j.eneco.2024.107937
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    More about this item

    Keywords

    Energy transition; Sustainable energy practices; Cryptocurrencies; Bitcoin; Ethereum;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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