Natural Hazards and Financial Activity: Evidence from Solar Storms Impact on BTC Mining

Panayotis Michaelides, Arsenios-Georgios Prelorentzos, Olivier Scaillet, Nikolas Topaloglou and Kien Tran
Additional contact information
Panayotis Michaelides: National Technical University of Athens (NTUA)
Arsenios-Georgios Prelorentzos: Foundation for Economic and Industrial Research (IOBE)
Olivier Scaillet: Swiss Finance Institute - University of Geneva
Nikolas Topaloglou: University of Cyprus - HERMES European Center of Excellence on Computational Finance and Economics
Kien Tran: University of Lethbridge

No 26-02, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Digitalization of finance has rapidly transformed the global financial system by introducing new complex technologies. As digital finance grows more interconnected, we show in this work that solar geomagnetic storms, i.e., an exogenous space-weather shock, pose a systemic risk comparable to climate transition pressures, with measurable consequences for Bitcoin (BTC) mining. BTC mining, an energy intensive process reliant on stable electricity and continuous network connectivity, faces increasing risks from solar storms, i.e., geomagnetic disturbances, capable of disrupting power grids and digital infrastructure. This study introduces a novel stepby- step ANN based causality test, leveraging Artificial Neural Networks (ANNs) to examine the nonlinear and dynamic causal relationship between solar storms and BTC mining activity. In this context, we formally establish consistency, asymptotic normality and other useful properties of the proposed ANN estimator. Using daily data from 09/2014 to 01/2023, our multi-horizon analysis identifies statistically significant short-, medium-, and long-term effects, revealing that severe solar storms immediately destabilize networks, delaying transaction confirmations and reducing BTC activity. Furthermore, we quantify the economic significance of these disruptions. During 2015 alone, geomagnetic storms were associated with a cumulative reduction of nearly 3 million BTC in trading activity, equivalent to an estimated value of around 883 million. The findings position solar storms as a critical but overlooked risk factor in digital finance, with implications for cryptocurrency market stability, mining infrastructure resilience, and regulatory oversight.

Keywords: Digital Finance; Bitcoin; AI; Artificial Neural Networks; Solar Storms (search for similar items in EconPapers)
JEL-codes: C22 C50 C51 C58 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2026-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6005034 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2602

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().