Quantifying the Asymmetric Information Flow between Bitcoin Prices and Electricity Consumption

Using transfer entropy and effective transfer entropy measures this study finds a bidirectional time-asymmetric information flow between monthly bitcoin prices and bitcoin total electricity consumption. Shannon's effective transfer entropy is estimated to be 0.0636 (Price->Electricity) and 0.0313 (Electricity->Price). Simulation data where the dependence of bitcoin total electricity consumption on monthly bitcoin price varies with innovation level shows that Renyi's transfer entropy is approximately equal to Shannon's transfer entropy as the value of q approaches 1. The study results are highly useful for managing the energy mix and carbon emissions associated with bitcoin & other cryptocurrency mining