Quantifying the asymmetric information flow between Bitcoin prices and electricity consumption
Moinak Maiti,
Darko B. Vukovic and
Michael Frömmel
Finance Research Letters, 2023, vol. 57, issue C
Abstract:
The present study uses transfer entropy and effective transfer entropy to quantify the asymmetric information flow between monthly Bitcoin prices (Price) and total Bitcoin electricity consumption (Electricity). Both the Shannon and Rényi estimates confirm a statistically significant information flow from Price to Electricity. However, Shannon and Rényi methods yield mixed results in quantifying the information flow for Electricity to Price. That indicates a possible non homogeneous and chaotic impact of total Bitcoin electricity consumption on Bitcoin prices. However, the Rényi transfer entropy value converges with Shannon's as the value of q approaches to 1. The study findings are highly useful for managing the energy mix and carbon emissions associated with Bitcoin & other cryptocurrency mining.
Keywords: Bitcoin; Electricity consumption; Shannon; Rényi; Transfer entropy; Energy mix (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005354
DOI: 10.1016/j.frl.2023.104163
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