THE IMPACT OF ENERGY CONSUMPTION IN CRYPTO ASSETS ON CRYPTO ASSET PRICES AND CARBON EMISSIONS: CASE OF BITCOIN AND ETHEREUM

Abstract

In this paper, it is aimed to evaluate the relationship between energy consumption in crypto assets and crypto asset prices. In this direction, the price, CO2 emission and energy consumption series of Bitcoin and Ethereum between March 17, 2021, and March 15, 2023, were examined weekly. In order to clarify the subject, Fourier Granger causality and Fourier ADL cointegration tests were applied to the series. In the findings, a bidirectional causality relationship was determined between Bitcoin price, Bitcoin energy consumption and Bitcoin CO2 emission series, and no causality relationship was detected between Ethereum price, Ethereum energy consumption and Ethereum CO2 emission series. On the cointegration side of the analyses, while there is a long-run nexus between Bitcoin Price and Bitcoin CO2 emission and Bitcoin energy consumption variables, it has been observed that there is no long-run nexus between the variables for Ethereum. At the end of the study, it was mentioned that it would be useful to examine the market values of these variables in future studies and that since the Merge event in Ethereum is an important development for crypto assets, it is possible to increase similar developments with the necessary incentives and policies in this direction.

Keywords

• cryptocurrency
• energy problem
• merge
• proof of stake
• proof of work