Cryptocurrency markets, macroeconomic news announcements and energy consumption

Motivated by recent evidence showing that shocks in cryptocurrencies’ trade volume increase their energy consumption and carbon footprint, this study seeks to identify the news-based determinants of the volume and number of trades of Bitcoin and Ethereum. Specifically, we investigate how the trading volume and number of trades in Bitcoin and Ethereum react to the release of U.S., German and Japanese macroeconomic news. Using 5-min frequency Bitcoin and Ethereum prices quoted against the US dollar, we find that the volume and number of trades show a significant response to macroeconomic releases. Furthermore, both the volume and number of trades in Bitcoin and Ethereum react to the same U.S. macroeconomic news, such as the Consumer Confidence Index, new home sales, and FOMC rate decisions. Our findings suggest that macroeconomic news can contribute to major cryptocurrencies' increased energy consumption and carbon footprint.