RESUMO
Bitcoin, a global financial asset, surpassed one trillion USD in November 2021, but its environmental impact may cause a 2 °C temperature rise by 2050. Using causal and connectedness analysis, we uncover non-linear relationships between bitcoin's energy consumption, price, and the Crypto Volatility Index. This study uses 1458 daily observations from several databases from March 31, 2019, to March 30, 2023. The phenomenon was analyzed using the theory of production and value investing theory. While the relationship between bitcoin-based electricity consumption and crypto market volatility is bidirectional, Granger causality tests reveal that bitcoin prices Granger-cause electricity consumption, but the converse is not true. Regarding Diebold-Yilmaz connectedness, the price of bitcoin acts as a net contributor, while bitcoin-based electricity consumption and crypto market volatility act as net receivers of spillover from bitcoin price. Our findings contrast with the traditional theory of production, where cost is supposed to determine price, and we show that some bitcoin miners continue operating according to the value investing theory despite suffering financial losses. Limited discussions around bitcoin pricing and its significant expense-that is bitcoin's electricity consumption-indicate the need to explore this relationship. Policymakers, green investors, and others may find the results relevant to building an efficient, environmentally friendly framework and creating much-required innovative regulations.
