Abstract:
This paper examines the causal interactions between energy consumption due to cryptocurrency mining activity and electricity return and volatility patterns across the power markets in the U.S., U.K. and Europe. We find that the effect is heterogeneous across the different power markets examined, while the effect of mining activity is consistently focused on return volatility. Accordingly, our findings provide robust evidence of the volatility effects of mining activity in power markets, suggesting that the crypto mining-power market nexus primarily entails risk effects, an issue of particular concern for hedgers whose goal is to stabilize energy costs in their operations.
