Powering profits, draining the planet: Demystifying the asymmetric impact of Bitcoin price on its electricity consumption

Nishant Sapra

Energy, 2025, vol. 333, issue C

Abstract: This study aims to demystify the link between Bitcoin pricing and the associated electricity costs, constituting the most significant cost in mining Bitcoin. The article revisits the typical Cost-price (electricity consumption -Bitcoin price) relationship in the context of Bitcoin. The research question is answered using the Nonlinear Autoregressive Distributed Lag (NARDL) Model complemented with Multiple Breakpoints Least Squares Regression (MBLSR). The study analyzes monthly data from various sources from March 2017 to September 2023 and is segregated into four different regimes. The convergence in both techniques provides rigour and robustness to the results. The findings reveal the asymmetric relationship where Bitcoin's energy consumption does not increase significantly with a positive change in Bitcoin Price. This behaviour is counterintuitive given that electricity consumption is expected to increase in a high price period because of more profit margins. The flooding of accumulated Bitcoins by the miners in high price periods may be a contributing reason for no significant increase in the electricity consumption in mining Bitcoins. Conversely, the fall in Bitcoin prices will reduce the energy consumed by the Bitcoin Network conforming to the anticipated pattern. This behaviour is in stark contradiction to the Law of Supply and is well explained by the Bitcoin miners' operational strategy in the Boom and Recession period. Relying on the asymmetric behaviour, investors can revamp their strategy to make profits in the market. In addition, findings suggest policymakers try to limit credit accessibility to miners in the bust to reduce the colossal energy consumption of Bitcoin.

Keywords: Green investment; Bitcoin; Energy consumption; Law of supply; Cost-price relationship; Cryptocurrency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:333:y:2025:i:c:s0360544225030555

DOI: 10.1016/j.energy.2025.137413

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