\begin{frame}{Chapter III}
	\huge
	\bf{Bitcoin Mining, the Next Shale Boom?}
\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\begin{frame}{Guiding Question}
	\Large
	How will bitcoin mining change oil production decisions in the United States?
	\large
	\vfill
\onslide<2->{Basin and state fixed effect model of flared gas value. Structural vector autoregression (SVAR) model of oil production elasticity. Time series model of bitcoin mining energy use.}
	\begin{itemize}
		\onslide<3->{\item{Effect depends on location}}
		\onslide<4->{\item{Response is \emph{not sensitive} to bitcoin price}}
		\onslide<4->{\item{Response is sensitive to natural gas price}}
		\onslide<5->{\item{Up to a 0.55\% increase in oil production}}
		\onslide<6->{\item{Oil revenues could increase by 0.63\%}}
		\onslide<7->{\item{Global oil price would decline by 0.2\%}}
	\end{itemize}
\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\subsection{Background}
\begin{frame}{Background: Bitcoin mining}
	\begin{columns}
		\begin{column}{0.5\textwidth}
			\begin{itemize}
				\onslide<2->{\item{Adds transactions to the block chain}}
				\onslide<2->{\item{Limited size in a block}}
				\onslide<3->{\item{Miner reward}}
				\onslide<3->{\item{User fees}}
				\onslide<4->{\item{Hash function}}
				\onslide<5->{\item{Difficultly adjustment}}
				\onslide<6->{\item{Application-specific integrated circuit (ASIC)}}
			\end{itemize}
		\end{column}
		\begin{column}{0.5\textwidth}
			\centering
			\includegraphics[width=\textwidth]{Chapter_III/figures/Cryptocurrency_Mining_Farm.jpg}
		\end{column}
	\end{columns}
\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\begin{frame}{Background: Flaring}
	\Large \textbf{Why is natural gas flared?}
	\large
	\begin{columns}
		\begin{column}{0.5\textwidth}
			\begin{itemize}
				\onslide<2->{\item{Natural gas is always produced with oil}}
				\onslide<3->{\item{Gas oil ratio (GOR)}}
				\onslide<4->{\item{Expensive pipelines required to move the gas}}
				\onslide<5->{\item{Flaring is cheaper in new or remote fields}}
			\end{itemize}
			\onslide<6->{Bitcoin miners have a mobile demand for low cost energy sources.}

		\end{column}
		\begin{column}{0.5\textwidth}
			\centering
\only<1-5>{
	\includegraphics[width=\textwidth]{Chapter_III/figures/FALRING.png}
	North Dakota flared gas \citep{dalrympleNorthDakotaNatural2018}
}
\only<6>{	\includegraphics[width=\textwidth]{Chapter_III/figures/BTC_MINER_FLARED.png}
	Crusoe Energy Bitcoin miner \citep{robertson2021}
}

		\end{column}
	\end{columns}

\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\subsection{Data}
\begin{frame}{Data}
	\begin{columns}
		\begin{column}{0.33\textwidth}
			\textbf{Enverus}
			\begin{itemize}
				\item{Well location}
				\item{Well attributes}
				\item{Oil and gas production}
			\end{itemize}
		\end{column}
		\begin{column}{0.33\textwidth}
			\textbf{Bitcoin Data}
			\begin{itemize}
				\item{Block difficulty}
				\item{Blocks added}
				\item{Bitcoin price}
			\end{itemize}
		\end{column}
		\begin{column}{0.33\textwidth}
			\textbf{Other Data}
			\begin{itemize}
				\item{Oil price}
				\item{Natural gas price}
				\item{Industrial index}
				\item{Temperature}
			\end{itemize}
		\end{column}
	\end{columns}
	\vfill
	Volume of oil and gas produced by a well is discounted to the date it was drilled \citep{anderson2018}.
\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\subsection{Econometrics}
\begin{frame}{Econometrics}
\Large	Three econometric results.
\large
	\begin{enumerate}
		\onslide<1->{\item{Structural vector autoregression: Elasticity of oil production}}
		\onslide<2->{\item{Fixed effect model of flared gas: Total subsidy from selling flared gas}}
		\onslide<3->{\item{Nonlinear Cointegrating Autoregressive Distributed Lag Mode (NARDL): Effect of bitcoin price shocks}}
	\end{enumerate}
\end{frame}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\subsection{Structural vector autoregression}
\begin{frame}{Information flow in oil markets}
\begin{figure}
	\includegraphics[width=\textwidth]{Chapter_III/figures/timeline.png}
\end{figure}
\onslide<2->{Restriction that drilling rates do not respond to price shocks within the same month \citep{kilian2009}. It takes time to acquire drilling rig contracts, licenses, and create engineering plans}
\end{frame}
%%%%%%%%%%%%%%%%%%%%
\begin{frame}{A matrix restrictions of the SVAR model}
	\small
	\begin{equation*}
	  \begin{pmatrix}
		  e^{\Delta BTU}_t\\
		e^{\Delta \theta}_t\\
		e^{\Delta D_{i}}_t\\
		e^{\Delta P_{g}}_t\\
		e^{\Delta P_{o}}_t
	  \end{pmatrix}=
	\begin{bmatrix} 
	1 & 0 & 0 & 0 & 0 \\ 
	0 & 1 & 0 & 0 & 0 \\ 
	a_{3,1} & a_{3,2} & 1 & 0 & 0 \\ 
	a_{4,1} & a_{4,2} & a_{4,3} & 1 & 0 \\ 
	a_{5,1} & a_{5,2} & a_{5,1} & a_{5,1} & 1 \\ 
	\end{bmatrix}
	  \begin{pmatrix}
	\epsilon_{q}\\
	\epsilon_{\theta}\\
	\epsilon_{D_{i}}\\
	\epsilon_{g}\\
	\epsilon_{o}
	  \end{pmatrix}
	  \begin{matrix}
		  \text{Joint Supply Shock}\\
		  \text{Composition Shock}\\
		  \text{Industrial Demand Shock}\\
		  \text{Gas Specific Demand Shock}\\
		  \text{Oil Specific Demand Shock}\\
	  \end{matrix}
	\end{equation*}
\end{frame}
%%%%%%%%%%%%%%%%%%%%
\begin{frame}{Key impulse response from industrial shock}
	\begin{columns}
		\begin{column}{0.45\textwidth}
	\small
			\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_BTU.pdf}
			IRF on energy production 
			\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_IND}
			IRF on industrial demand
		\end{column}
		\begin{column}{0.45\textwidth}
	\small
			\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_WTI}
			IRF on oil price
			\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_HH}
			IRF on natural gas price
		\end{column}
	\end{columns}
\end{frame}
%%%%%%%%%%%%%%%%%%%%
\begin{frame}{Elasticity estimate}
	\only<1-2>{
\onslide<1>{\begin{equation*}
	Elasticity_{S}=\sum_{t=0}^{t}\left(\frac{\Delta \theta_{t} \cdot \Delta q_{t}}{\Delta P_{oil,t}}\right)
\end{equation*}
}
\newline
\onslide<2>{\begin{equation*}
	0.55=\sum_{t=0}^{120}\left(\frac{\Delta \theta_{t} \cdot \Delta q_{t}}{\Delta P_{oil,t}}\right)
\end{equation*}}
}
\only<3->{
	\centering
	Average U.S. subdsidy estimated to be 0.11 \(\frac{MCF}{BBL}\) 
\begin{equation*}
	\text{Oil subsidy equivalent} =\frac{\$0.0605\cdot P_{gas}}{BBL}
\end{equation*}


}
\end{frame}
%%%%%%%%%%%%%%%%%%START HERE

\begin{frame}{Bitcoin mining model}
	\only<1>{
		\Large How sensitive are payments to oil companies depending on the price of bitcoin?
	}
	\only<2->{
	\centering
\begin{figure}
	\centering
	\resizebox{\textwidth}{!}{
	\begin{tikzpicture}[domain=0:45]
		\def\qone{4}
	
		\draw[very thin,color=gray] (-0.1,-0.1) grid (11.9,6.7);
		\draw[- >,thick] (-0.2,0) -- (12,0) node[right] {$Hash$};
		\draw[- >,blue,thick] (5.2,0.6) parabola (9,5.5) node[left] {Supply} ;
		\draw[blue,thick] (0,0.3)  -- (5.2,0.6) ;
		\fill[black] (5.2,0.6) circle (2pt);
		\draw (5.2,1) node[above] {Functional shift};
		\draw[red] (6,3.5) node[left] {Total Revenue (\$)};
		\draw[red] (5.5,3) node[left] {\(y=m\cdot x \)};
		\draw[cyan] (8,1) node[above] {MR=m};
		\draw[cyan] (10.5,2) node[above] {\(MR=m\cdot\)(1+x-k)};
		\draw[- >,dashed,thick] (9.4,0) -- (9.4,5.8) node[above] {Capital Constraint (k)};
		\draw[- >,thick] (0,-0.2) -- (0,6.9) node[above] {$\frac{\$}{BTC}$};
		\draw[- >,thick, color=red] (0,0)--(11.5,5.5) ;
		\draw[thick, color=cyan] (0,1)--(9.4,1) ;
		\draw[- >,thick, color=cyan] (9.4,1)--(11,2.0909) ;

	\end{tikzpicture}
}
	\caption{Short-run simplified hash supply}\label{SRS}
\end{figure}

	
}
\end{frame}
%%%%%%%%%%%%%%%%%
\begin{frame}{Bitcoin NARDL model}
\only<1>{The proposed model uses the estimations of \citep{shin2014} and can be written in a simple form as:
\begin{equation*}
h_{t}=\sum_{j=1}^{p}\phi_{j}h_{t-j}+\sum_{j=0}^{q}\left(\theta_{t-j}^{+} x_{t-j}^{+}+\theta_{t-j}^{-} x_{t-j}^{-}\right)+\epsilon_{t}
\end{equation*}
With \(h_{t}\) being the hash rate of all miners on day \(t\) and \(x_{t}\) as the total miner reward. A (\(+/-\)) indicating a positive or negative change in reward. \emph{P} is the autoregressive lags on hash, and \emph{q} is the lags on miner reward. The coefficients of the regression are \(\phi\) for lags on hash and \(\theta\) for lags on reward.}
\only<2>{
\begin{table}[!htbp] \centering 
  \label{REG}
  \resizebox{0.4\textwidth}{!}
{\begin{tabular}{@{\extracolsep{0pt}}lcc} 
\\[-1.8ex]\hline 
\hline \\[-1.8ex] 
% & \multicolumn{2}{c}{\textit{Dependent variable:}} \\ 
%\cline{2-3} 
\\[-1.8ex] & \multicolumn{2}{c}{hash} \\ 
\\[-1.8ex] & Short Run & Long Run\\ 
\hline \\[-1.8ex] 
 \(hash_{t-1}\) &-0.015$^{**}$ &  \\ 
  & (0.01) &  \\ 
  & & \\ 
 \(Rev^{+}\) & 0.286$^{***}$ & 18.89$^{**}$ \\ 
  & (0.006) & (8.42) \\ 
  & & \\ 
 \(Rev_{t-1}^{+}\) & $-$0.348$^{***}$ & $-$22.95$^{**}$ \\ 
  & (0.058) & (10.48) \\ 
  & & \\ 
 \(Rev_{t-1}^{+}\) & 0.0847$^{**}$ & 5.59$^{**}$ \\ 
  & (0.038) & (3.27) \\ 
  & & \\ 
 \(Rev^{-}\) & 0.331$^{***}$ & 21.88$^{*}$\\ 
  & (0.038) & (9.62) \\ 
  & & \\ 
 \(Rev_{t-1}^{-}\) & $-$0.321$^{***}$ & $-$21.21$^{**}$ \\ 
  & (0.037) & (9.30) \\ 
  & & \\ 
 \(trend\) & $-$0.001 & $-$0.040$^{**}$ \\ 
  & (0.001) & (0.04) \\ 
  & & \\ 
 \(Const\) & 0.454$^{**}$ &  \\ 
  & (0.185) &  \\ 
  & & \\ 
\hline 
  & \bf{Asymmetry} & \\ 
\hline \\[-1.8ex] 
 W-stat & 0.5021178 & 2187.54 $^{***}$ \\ 
\hline \\[-1.8ex] 
\hline \\[-1.8ex] 
Observations & \multicolumn{2}{c}{323}\\
R$^{2}$ & \multicolumn{2}{c}{0.4104}\\ 
Adjusted R$^{2}$ &  \multicolumn{2}{c}{0.3977}\\ 
Residual Std. Error (df = 323) &  \multicolumn{2}{c}{0.0504} \\ 
F Statistic (df = 7; 323) & \multicolumn{2}{c}{32.18$^{***}$} \\ 
\hline \\[-1.8ex] 
\multicolumn{2}{l}{\textit{Note:} $^{*}$p$ < $0.1; $^{**}$p$ < $0.05; $^{***}$p$ < $0.01} \\ 
\end{tabular} }
\end{table} 
}

\only<3>{
	A shock of less than 18\% is approximately the same whether the price increase is negative or positive
}

\end{frame}
\begin{frame}{Results}
	\begin{itemize}
		\item{Average U.S. oil output increase of \(\frac{\$0.0605\cdot P_{gas}}{BBL}\)}
		\item{Response is \emph{not sensitive} to bitcoin price}
		\item{Response is sensitive to natural gas price}
	\end{itemize}
\end{frame}

%%%%%%%%%%%%%%%%%
\begin{frame}[plain]
	\huge 
	Conclusion
\end{frame}


	
