THE CAUSAL RELATIONSHIP BETWEEN BITCOIN ENERGY CONSUMPTION AND CRYPTOCURRENCY UNCERTAINTY

Abstract

Purpose- Investigating the relationship between the energy consumption for Bitcoin and the price and policy uncertainties in the cryptocurrency markets. Methodology- It was preferred for unit root tests of series the Zivot-Andrews Unit Root Test, which takes into account structural breaks. Depending on the stagnation of the variables at different levels, the Toda-Yamamoto (1995) causality test was applied by using weekly data in period 19.02.2017 and 07.02.2021. Findings- One-way causality was found on the indices of cryptocurrency price uncertainty and cryptocurrency policy uncertainty from bitcoin energy consumption. In addition, it is understood from the Chi-Square Test Statistic (13.16980) coefficient that the change in bitcoin energy consumption is more dominant on the crypto money policy uncertainty. It was reached that changes in bitcoin energy consumption have an effect on both price and crypto money policies in all crypto markets. Conclusion- In line with these results, it is concluded that the uncertainties in the crypto markets are under the influence of many external political factors. This study investigated the effect of price and political uncertainty on bitcoin energy consumption in the entire cryptocurrency market, but it was concluded that bitcoin energy consumption is not only linked to crypto markets, but also under the influence of government interventions, bans, ill-recognition, and developments and movements in other financial markets.

Keywords

• Bitcoin energy consumption
• bitcoin mining
• cryptocurrencies
• crypto money price uncertainty index

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