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Information flow dynamics between cryptocurrency returns and electricity consumption: A comparative analysis of Bitcoin and Ethereum
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Abstract(s)
Understanding energy consumption associated with cryptocurrency mining gained increasing
attention, with the literature focusing mainly on Bitcoin. This study uses data from the two energy
consumption indices, to estimate static and dynamic transfer entropies. The results provide a
nuanced understanding of the bidirectional relationships and their implications. The dominant
direction of information flow for Bitcoin is from electricity consumption to returns, while for
Ethereum, it is from returns to electricity consumption, suggesting that Ethereum’s returns
significantly impact electricity consumption patterns. Results highlight the need for policies that
integrate energy forecasting and environmental sustainability considerations and has significant
implications for policymaking
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Keywords
Cryptocurrency Energy consumption Bitcoin Ethereum Transfer entropy Asymmetric information flow
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