Powering perception, echoing green voices: The interplay of Cryptocurrency's energy footprint and environmental discourse in steering the direction of the market

Abstract

This study examines the influence of cryptocurrency's environmental footprint on market behavior through an analysis of 66,582 Reddit posts about Bitcoin and 23,231 about Ethereum. Using a vector autoregression (VAR) model, it explores the relationship between social media discussions on environmental issues, electricity use, and cryptocurrencies' market dynamics. We find a negative correlation between environmental discussions and Bitcoin volatility. Moreover, real electricity use has a more pronounced impact than social media discussions on both Bitcoin and Ethereum volatility. This indicates that crypto market investors prioritize real-world indicators over information from social media discussions. The study also reveals a bidirectional relationship between Bitcoin volatility and environmental posts, highlighting the complex interplay between market behavior and public discourse on environmental matters in the cryptocurrency domain. These results suggest the need for policies that limit energy consumption due to mining, promote renewable energy, and enhance investor education on environmental impacts to support sustainable practices in the cryptocurrency market.

Keywords

• Q43
• Q53
• G14