From digital mining to market prices: An empirical analysis of the relationship between energy consumption and price dynamics of Bitcoin and Ether
From digital mining to market prices: An empirical analysis of the relationship between energy consumption and price dynamics of Bitcoin and Ether

Summary/Abstract: This study aims to comparatively examine the relationships between Bitcoin and Ethereum's energy consumption and price dynamics. Using daily frequency data, Augmented Dickey-Fuller (ADF), Phillips-Perron (PP), ARDL cointegration tests, and Toda–Yamamoto causality analysis were applied to evaluate the effects of cryptocurrency markets on energy demand from both short-term and long-term perspectives. The analysis results indicate that there is a long-term cointegration relationship between energy consumption and prices for Bitcoin and a unidirectional causality from prices to energy consumption. In contrast, ARDL boundary test results for Ethereum revealed no long-term relationship, and causality analysis also failed to detect any directional causality between price and energy consumption. This indicates that with Ethereum's transition to a Proof-of-Stake mechanism, energy consumption has become independent of price movements. The findings reveal that the effects of cryptocurrency markets on the energy economy vary according to technology-specific structural characteristics.

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