Effect of Cryptocurrency Mining on Semiconductor Industry

This study investigates the impact of cryptocurrency mining on the technology sector as mining imposes a strong demand for semiconductor products. I find a positive association between the return of MSCI semiconductor index and the crash of the cryptocurrency market. Moreover, there is a bilateral Granger causal relationship between daily returns of Bitcoin and MSCI worldwide semiconductor index returns. The stronger impact on the volatile technology sector over the cryptocurrency bust cycle implies a weak diversification effect by including semiconductor index and cryptocurrencies in a portfolio