317 lines
10 KiB
TeX
317 lines
10 KiB
TeX
\begin{frame}{Chapter III}
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\huge
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\bf{Bitcoin Mining, the Next Shale Boom?}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\begin{frame}{Guiding Question}
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\Large
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How will bitcoin mining change oil production decisions in the United States?
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\large
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\vfill
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\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.}
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\begin{itemize}
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\onslide<3->{\item{Effect depends on location}}
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\onslide<4->{\item{Response is \emph{not sensitive} to bitcoin price}}
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\onslide<4->{\item{Response is sensitive to natural gas price}}
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\onslide<5->{\item{Up to a 0.55\% increase in oil production}}
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\onslide<6->{\item{Oil revenues could increase by 0.63\%}}
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\onslide<7->{\item{Global oil price would decline by 0.2\%}}
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\end{itemize}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\subsection{Background}
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\begin{frame}{Background: Bitcoin mining}
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\begin{columns}
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\begin{column}{0.5\textwidth}
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\begin{itemize}
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\onslide<2->{\item{Adds transactions to the block chain}}
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\onslide<2->{\item{Limited size in a block}}
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\onslide<3->{\item{Miner reward}}
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\onslide<3->{\item{User fees}}
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\onslide<4->{\item{Hash function}}
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\onslide<5->{\item{Difficultly adjustment}}
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\onslide<6->{\item{Application-specific integrated circuit (ASIC)}}
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\end{itemize}
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\end{column}
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\begin{column}{0.5\textwidth}
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\centering
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\includegraphics[width=\textwidth]{Chapter_III/figures/Cryptocurrency_Mining_Farm.jpg}
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\end{column}
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\end{columns}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\begin{frame}{Background: Flaring}
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\Large \textbf{Why is natural gas flared?}
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\large
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\begin{columns}
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\begin{column}{0.5\textwidth}
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\begin{itemize}
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\onslide<2->{\item{Natural gas is always produced with oil}}
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\onslide<3->{\item{Gas oil ratio (GOR)}}
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\onslide<4->{\item{Expensive pipelines required to move the gas}}
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\onslide<5->{\item{Flaring is cheaper in new or remote fields}}
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\end{itemize}
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\onslide<6->{Bitcoin miners have a mobile demand for low cost energy sources.}
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\end{column}
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\begin{column}{0.5\textwidth}
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\centering
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\only<1-5>{
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\includegraphics[width=\textwidth]{Chapter_III/figures/FALRING.png}
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North Dakota flared gas \citep{dalrympleNorthDakotaNatural2018}
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}
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\only<6>{ \includegraphics[width=\textwidth]{Chapter_III/figures/BTC_MINER_FLARED.png}
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Crusoe Energy Bitcoin miner \citep{robertson2021}
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}
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\end{column}
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\end{columns}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\subsection{Data}
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\begin{frame}{Data}
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\begin{columns}
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\begin{column}{0.33\textwidth}
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\textbf{Enverus}
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\begin{itemize}
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\item{Well location}
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\item{Well attributes}
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\item{Oil and gas production}
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\end{itemize}
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\end{column}
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\begin{column}{0.33\textwidth}
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\textbf{Bitcoin Data}
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\begin{itemize}
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\item{Block difficulty}
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\item{Blocks added}
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\item{Bitcoin price}
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\end{itemize}
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\end{column}
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\begin{column}{0.33\textwidth}
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\textbf{Other Data}
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\begin{itemize}
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\item{Oil price}
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\item{Natural gas price}
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\item{Industrial index}
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\item{Temperature}
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\end{itemize}
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\end{column}
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\end{columns}
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\vfill
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Volume of oil and gas produced by a well is discounted to the date it was drilled \citep{anderson2018}.
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\subsection{Econometrics}
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\begin{frame}{Econometrics}
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\Large Three econometric results.
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\large
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\begin{enumerate}
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\onslide<1->{\item{Structural vector autoregression: Elasticity of oil production}}
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\onslide<2->{\item{Fixed effect model of flared gas: Total subsidy from selling flared gas}}
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\onslide<3->{\item{Nonlinear Cointegrating Autoregressive Distributed Lag Mode (NARDL): Effect of bitcoin price shocks}}
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\end{enumerate}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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\subsection{Structural vector autoregression}
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\begin{frame}{Information flow in oil markets}
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\begin{figure}
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\includegraphics[width=\textwidth]{Chapter_III/figures/timeline.png}
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\end{figure}
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\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}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%
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\begin{frame}{A matrix restrictions of the SVAR model}
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\small
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\begin{equation*}
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\begin{pmatrix}
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e^{\Delta BTU}_t\\
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e^{\Delta \theta}_t\\
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e^{\Delta D_{i}}_t\\
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e^{\Delta P_{g}}_t\\
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e^{\Delta P_{o}}_t
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\end{pmatrix}=
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\begin{bmatrix}
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1 & 0 & 0 & 0 & 0 \\
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0 & 1 & 0 & 0 & 0 \\
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a_{3,1} & a_{3,2} & 1 & 0 & 0 \\
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a_{4,1} & a_{4,2} & a_{4,3} & 1 & 0 \\
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a_{5,1} & a_{5,2} & a_{5,1} & a_{5,1} & 1 \\
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\end{bmatrix}
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\begin{pmatrix}
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\epsilon_{q}\\
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\epsilon_{\theta}\\
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\epsilon_{D_{i}}\\
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\epsilon_{g}\\
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\epsilon_{o}
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\end{pmatrix}
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\begin{matrix}
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\text{Joint Supply Shock}\\
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\text{Composition Shock}\\
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\text{Industrial Demand Shock}\\
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\text{Gas Specific Demand Shock}\\
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\text{Oil Specific Demand Shock}\\
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\end{matrix}
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\end{equation*}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%
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\begin{frame}{Key impulse response from industrial shock}
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\begin{columns}
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\begin{column}{0.45\textwidth}
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\small
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\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_BTU.pdf}
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IRF on energy production
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\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_IND}
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IRF on industrial demand
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\end{column}
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\begin{column}{0.45\textwidth}
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\small
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\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_WTI}
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IRF on oil price
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\includegraphics[width=\textwidth]{Chapter_III/figures/IRF_HH}
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IRF on natural gas price
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\end{column}
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\end{columns}
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\end{frame}
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%%%%%%%%%%%%%%%%%%%%
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\begin{frame}{Elasticity estimate}
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\only<1-2>{
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\onslide<1>{\begin{equation*}
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Elasticity_{S}=\sum_{t=0}^{t}\left(\frac{\Delta \theta_{t} \cdot \Delta q_{t}}{\Delta P_{oil,t}}\right)
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\end{equation*}
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}
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\newline
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\onslide<2>{\begin{equation*}
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0.55=\sum_{t=0}^{120}\left(\frac{\Delta \theta_{t} \cdot \Delta q_{t}}{\Delta P_{oil,t}}\right)
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\end{equation*}}
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}
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\only<3->{
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\centering
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Average U.S. subdsidy estimated to be 0.11 \(\frac{MCF}{BBL}\)
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\begin{equation*}
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\text{Oil subsidy equivalent} =\frac{\$0.0605\cdot P_{gas}}{BBL}
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\end{equation*}
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}
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\end{frame}
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%%%%%%%%%%%%%%%%%%START HERE
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\begin{frame}{Bitcoin mining model}
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\only<1>{
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\Large How sensitive are payments to oil companies depending on the price of bitcoin?
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}
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\only<2->{
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\centering
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\begin{figure}
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\centering
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\resizebox{\textwidth}{!}{
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\begin{tikzpicture}[domain=0:45]
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\def\qone{4}
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\draw[very thin,color=gray] (-0.1,-0.1) grid (11.9,6.7);
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\draw[- >,thick] (-0.2,0) -- (12,0) node[right] {$Hash$};
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\draw[- >,blue,thick] (5.2,0.6) parabola (9,5.5) node[left] {Supply} ;
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\draw[blue,thick] (0,0.3) -- (5.2,0.6) ;
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\fill[black] (5.2,0.6) circle (2pt);
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\draw (5.2,1) node[above] {Functional shift};
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\draw[red] (6,3.5) node[left] {Total Revenue (\$)};
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\draw[red] (5.5,3) node[left] {\(y=m\cdot x \)};
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\draw[cyan] (8,1) node[above] {MR=m};
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\draw[cyan] (10.5,2) node[above] {\(MR=m\cdot\)(1+x-k)};
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\draw[- >,dashed,thick] (9.4,0) -- (9.4,5.8) node[above] {Capital Constraint (k)};
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\draw[- >,thick] (0,-0.2) -- (0,6.9) node[above] {$\frac{\$}{BTC}$};
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\draw[- >,thick, color=red] (0,0)--(11.5,5.5) ;
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\draw[thick, color=cyan] (0,1)--(9.4,1) ;
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\draw[- >,thick, color=cyan] (9.4,1)--(11,2.0909) ;
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\end{tikzpicture}
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}
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\caption{Short-run simplified hash supply}\label{SRS}
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\end{figure}
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}
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\end{frame}
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%%%%%%%%%%%%%%%%%
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\begin{frame}{Bitcoin NARDL model}
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\only<1>{The proposed model uses the estimations of \citep{shin2014} and can be written in a simple form as:
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\begin{equation*}
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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}
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\end{equation*}
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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.}
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\only<2>{
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\begin{table}[!htbp] \centering
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\label{REG}
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\resizebox{0.4\textwidth}{!}
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{\begin{tabular}{@{\extracolsep{0pt}}lcc}
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\\[-1.8ex]\hline
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\hline \\[-1.8ex]
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% & \multicolumn{2}{c}{\textit{Dependent variable:}} \\
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%\cline{2-3}
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\\[-1.8ex] & \multicolumn{2}{c}{hash} \\
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\\[-1.8ex] & Short Run & Long Run\\
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\hline \\[-1.8ex]
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\(hash_{t-1}\) &-0.015$^{**}$ & \\
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& (0.01) & \\
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& & \\
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\(Rev^{+}\) & 0.286$^{***}$ & 18.89$^{**}$ \\
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& (0.006) & (8.42) \\
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& & \\
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\(Rev_{t-1}^{+}\) & $-$0.348$^{***}$ & $-$22.95$^{**}$ \\
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& (0.058) & (10.48) \\
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& & \\
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\(Rev_{t-1}^{+}\) & 0.0847$^{**}$ & 5.59$^{**}$ \\
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& (0.038) & (3.27) \\
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& & \\
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\(Rev^{-}\) & 0.331$^{***}$ & 21.88$^{*}$\\
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& (0.038) & (9.62) \\
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& & \\
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\(Rev_{t-1}^{-}\) & $-$0.321$^{***}$ & $-$21.21$^{**}$ \\
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& (0.037) & (9.30) \\
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& & \\
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\(trend\) & $-$0.001 & $-$0.040$^{**}$ \\
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& (0.001) & (0.04) \\
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& & \\
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\(Const\) & 0.454$^{**}$ & \\
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& (0.185) & \\
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& & \\
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\hline
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& \bf{Asymmetry} & \\
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\hline \\[-1.8ex]
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W-stat & 0.5021178 & 2187.54 $^{***}$ \\
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\hline \\[-1.8ex]
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\hline \\[-1.8ex]
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Observations & \multicolumn{2}{c}{323}\\
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R$^{2}$ & \multicolumn{2}{c}{0.4104}\\
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Adjusted R$^{2}$ & \multicolumn{2}{c}{0.3977}\\
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Residual Std. Error (df = 323) & \multicolumn{2}{c}{0.0504} \\
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F Statistic (df = 7; 323) & \multicolumn{2}{c}{32.18$^{***}$} \\
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\hline \\[-1.8ex]
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\multicolumn{2}{l}{\textit{Note:} $^{*}$p$ < $0.1; $^{**}$p$ < $0.05; $^{***}$p$ < $0.01} \\
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\end{tabular} }
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\end{table}
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}
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\only<3>{
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A shock of less than 18\% is approximately the same whether the price increase is negative or positive
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}
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\end{frame}
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\begin{frame}{Results}
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\begin{itemize}
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\item{Average U.S. oil output increase of \(\frac{\$0.0605\cdot P_{gas}}{BBL}\)}
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\item{Response is \emph{not sensitive} to bitcoin price}
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\item{Response is sensitive to natural gas price}
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\end{itemize}
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\end{frame}
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%%%%%%%%%%%%%%%%%
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\begin{frame}[plain]
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\huge
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Conclusion
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\end{frame}
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