Cryptocurrency Mining Research Articles

The study of some issues of the application of cryptocurrency mining technology in Kazakhstan

Object: Analyze the use of cryptocurrency mining technology in Kazakhstan and develop recommendations for improving its effective operation.
 Methods: We have used scientific methodological and research approaches, such as comparison, grouping, analysis, classification, statistical data, induction, deduction, economic-mathematical methods, and modeling.
 Findings: The study's practical significance is that these principles and approaches can be used to form a mining farm development strategy. The proposals presented will improve the digital efficiency of the company and stabilize and improve its financial and economic situation by making appropriate management decisions. The study results make it possible to solve problems related to the ability of enterprises to provide a medium and long-term stable position in the market and flexibly adapt to the environment.
 Conclusions: Based on the study, the concept of “cryptocurrency”, “mining”, and “mining farm” was clarified as a particular form of a new information economy and society that combines its input stages of the technological chain or stages of its release in order to achieve significant competitive advantages compared to specialized types of digital money. The features of digital money, such as cryptocurrencies and their mining, which include various platforms, objects, and types but have common elements, technologies, development management, and risks, were identified. A methodology for analyzing the IT architecture of cryptocurrency and the volatility of the digital currency is proposed, which allows one to find out quantitative and qualitative indicators, assess the extensiveness, intensity, and efficiency of the use of cryptocurrency, and determine the reserves for its full use.

Problems and Prospects of State Regulation of Cryptomining in Kazakhstan

The cryptocurrency mining sector in Kazakhstan has witnessed remarkable expansion, attracting global miners due to favourable conditions. However, this growth has underscored the country's energy scarcity, leading to the enforcement of stringent regulations by the government. This article seeks to offer a thorough comprehension of the regulatory framework governing cryptocurrency mining in Kazakhstan. Examining diverse aspects such as the legal status of mining, licensing structures, tax considerations, and the impact on energy infrastructure, the study utilizes international experiences and stimulus materials. Through the analysis of media representation and examination of primary trends, it is revealed that while the government has addressed legal gaps and instituted transparent tax procedures, taxing digital mining may discourage foreign investments, given the industry's current fragility due to excessive regulations. The article provides insights into the regulatory landscape, emphasizing challenges and opportunities.

Cryptocurrency mining policy to protect the environment

Cryptocurrency mining policy to protect the environment

Cryptocurrency mining as a novel virtual energy storage system in islanded and grid-connected microgrids

Renewable electrical energy (such as: solar and wind energies) generation in microgrids (MGs), is gaining attention to reduce greenhouse gas emissions. Microgrid operators (MOs) aim to create self-sufficient, environmentally sustainable grids, increasing the capacity of renewable energy sources (RESs) by up to 100%. Despite of the benefits of this trend, challenges arise from non-controlled characteristics of these power generations and their seasonal variations, causing fluctuations and renewable energy curtailment. Although the technical solutions; such as: the demand response (DR) programs, and the conventional electrical energy storage systems (EESSs) can help, however those may face limitations in countries with high seasonal energy generation and consumption variations. This paper introduces cryptocurrency mining loads (CMLs) as innovative virtual energy storage systems (VESSs), named cryptocurrency energy storage systems (CESSs). It proposes a structure to store excess renewable energy in cryptocurrency units (CCUs) like Bitcoin (BTC). CESSs can be charged during off-peak intervals and, conversely, they discharge during high-demand periods to reduce the overall operational cost of MGs. Furthermore, it presents a new energy management system (EMS) formulation for the optimal operation of MGs in the presence of CESSs, providing an opportunity to generate additional electricity from RESs and to mitigate renewable energy curtailment. This paper explores the optimal operation conditions of both islanded and grid-connected MG with the proposed CESS. Utilizing a dataset from an island in Finland as a practical MG, its effectiveness is demonstrated through several case studies. The results of one case study in this paper demonstrate that the proposed CESS can decrease the operating cost of the MG by about 46.5%. Additionally, it is showed that by application of CESS the renewable energy curtailment is significantly reduced, and approached zero.

Sustainable Optimizing Performance and Energy Efficiency in Proof of Work Blockchain: A Multilinear Regression Approach

The energy-intensive characteristics of the computations performed by graphics processing units (GPUs) in proof-of-work (PoW) blockchain technology are readily apparent. The optimization of GPU feature configuration is a complex subject that significantly impacts a system’s energy consumption and performance efficiency. The primary objectives of this study are to examine and improve the energy consumption characteristics of GPUs, which play a crucial role in the functioning of blockchains and the mining of cryptocurrencies. This study examines the complex relationship between GPU configurations and system architecture components and their effects on energy efficiency and sustainability. The methodology of this study conducts experiments involving various GPU models and mining software, evaluating their effectiveness across various configurations and environments. Multilinear regression analysis is used to study the complex relationships between critical performance indicators like power consumption, thermal dynamics, core speed, and hash rate and their effects on energy efficiency and performance. The results reveal that strategically adjusting GPU hardware, software, and configuration can preserve substantial energy while preserving computational efficiency. GPU core speed, temperature, core memory speed, ETASH algorithms, fan speed, and energy usage significantly affected the dependent computational-efficiency variable (p = 0.000 and R2 = 0.962) using multilinear regression analysis. GPU core speed, temperature, core memory speed, fan speed, and energy usage significantly affected efficient energy usage (p = 0.000 and R2 = 0.989). The contributions of this study offer practical recommendations for optimizing the feature configurations of GPUs to reduce energy consumption, mitigate the environmental impacts of blockchain operations, and contribute to the current research on performance in PoW blockchain applications.

Oligopolska struktura na tržištu kriptovaluta

Blockchain technology has been announced as the driving force behind the democratization of digital business. Various interest groups believed that cryptocurrencies would enable fast, cheap and anonymous payments over the Internet. The absence of a central institution and the possibility of the participation of the wider community in the maintenance of the system should have created electronic money adapted to individuals, not the financial elite. However, the question arises whether cryptocurrencies really provide equal opportunities for all participants. The subject of the paper is the degree of centralization of the most famous cryptocurrency systems in terms of wealth distribution and the possibility of participation in their maintenance. The goal of the paper is to determine the degree of inequality in various aspects of the functioning of the cryptocurrency system. The results of the analysis indicate that cryptocurrencies function separately from the traditional financial system, but do not enable the financial inclusion of marginalized social groups. No current cryptocurrency community provides equality of participants, neither in terms of mining, nor in terms of wealth distribution. It can be concluded that the mining of cryptocurrencies and their secondary circulation show clear characteristics of oligopolistic structures.

Time-frequency comovements between environmental cryptocurrency sentiment and faith-based sectoral stocks

The growth of digital assets in recent periods are accompanied by negative externalities, which raise concerns over sustainability. This has influenced the news content on both conventional and social media outlets, leading to the creation of the index of cryptocurrency environmental attention (ICEA). Given the pivotal role of social and conventional media in forming investors’ attitudes and behavior in financial markets, we address this issue from the perspective of Islamic stocks, which by their nature represent a class of Shariah-compliant sustainable assets. With dataset spanning from 2014 onwards up to July 2022, we analyze how the ICEA induces market dynamics in Islamic stocks covering diverse economic sectors. By applying the bi-wavelet-based time-frequency econometric framework, our empirical findings reveal time-varying levels of coherence between the ICEA and Islamic sectoral stocks, implying that the pricing and returns-generating dynamics across various economic sectors in Islamic markets are led by media coverage on environmental attention vis-à-vis the mining and trade of cryptocurrencies. Notwithstanding, our results indicate that the real “brick-and-mortar” categories of faith-based stocks, which contains the basic materials, consumer goods, industrials, and oil & gas sectors, provide attractive diversification attributes. Our findings are important for risk, portfolio, and policy management.

Особенности налогообложения операций с цифровой валютой

The subject of the study is the taxation of transactions with digital currency. The objectives of the work are to establish the key features of taxation of transactions with digital currency in the Russian Federation, to determine approaches to making changes to regulatory legal documents. The relevance of the work is due to the accelerating development of digital technologies, in which the legislator does not have time to develop and adopt appropriate legislative acts. Based on the analysis of the legislation of the Russian Federation, draft laws, letters from the Ministry of Finance and the Federal Tax Service of Russia, program documents of the Bank for International Settlements, scientific publications of Russian and foreign researchers, the concepts of cryptocurrency, digital currency, digital financial assets, mining of cryptocurrencies for tax purposes have been clarified. The differences in the interpretations of the concepts of various types of digital assets according to the method of creation and the purposes of their use are highlighted. The features of taxation of transactions with digital assets in terms of value added tax, corporate income tax, and tax paid under the simplified taxation system are described. It is concluded that for the purposes of calculating VAT, digital currency can be qualified as property. Cryptocurrency should be defined as a digital currency. When mining cryptocurrencies using mining equipment that is actually located on the territory of the Russian Federation, the service for organizing the issuance of digital currency takes place on the territory of the Russian Federation. It is proposed to exclude contradictions in the definition of the law enforcement of new digital technologies in the country's economy from the legislation, which will allow subjects of foreign economic activity to use digital technologies in the legal field, without expecting possible negative legal consequences.

The impact of blockchain technology on the environment

This paper focuses on the environmental impact of blockchain technology, particularly on electricity consumption for equipment operation and cooling. During its operation, the device energy is converted into heat, which must be efficiently dispersed. Additionally, the paper examines the rate of mining equipment replacement and the subsequent e-waste concerns. The impact of blockchain technology on the environment is a complex and debated topic. Only the following two aspects are discussed in this paper: 1) Energy Consumption: (a) Positive Impact: Blockchain technology, especially in the context of cryptocurrencies like Bitcoin, has been criticized for its high energy consumption due to the consensus mechanism called Proof of Work (PoW). However, some blockchain networks use alternative consensus mechanisms like Proof of Stake (PoS), which is more energy-efficient, and b) Negative Impact: PoW-based blockchains, such as Bitcoin, require significant computational power, leading to high energy consumption. The environmental impact is a concern, especially if the electricity used comes from non-renewable sources. 2) Mining and E-Waste: (a) Positive Impact: Blockchain technology can help in tracking the supply chain and provenance of minerals, which could reduce the use of conflict minerals and promote ethical mining practices. (b)Negative Impact: The mining of cryptocurrencies involves specialized hardware that becomes obsolete quickly, contributing to electronic waste (e-waste). This can have negative environmental consequences if not properly managed and recycled. The central topic of this paper is electric energy consumption and as a consequence CO2 emission footprint. Because of the fast growth of data centers and mining centers, consumption of electric energy has grown exponentially in the past decade. Together with the consumption of electric energy, CO2 emission grows dramatically.

Investigating the Cryptocurrency Mining Loads’ High Penetration Impact on Electric Power Grid

Investigating the Cryptocurrency Mining Loads’ High Penetration Impact on Electric Power Grid

ПЕРСПЕКТИВЫ ОРГАНИЗАЦИИ, РЕГУЛИРОВАНИЯ И НАЛОГООБЛОЖЕНИЯ МАЙНИНГА В РОССИИ

Сry ptocurrency mining in Russia is not regulated by current legislation today, but the authorities recognize the existence of a business in this area that needs to be legalized. According to the scientific analysis, a low level of development of cryptocurrency mining organization, regulation and taxation issues was revealed. The international experience in this area has been summarized, such activities are generally prohibited, but there are countries where both regulation and taxation are carried out. The author has developed a model for the organization, regulation and taxation of cryptocurrency mining in the Russian Federation using the example of the first cryptocurrency – bitcoin, which involves embedding it into the current legal system without making significant changes in order to reduce time and administrative costs.

Browser-Based Cryptocurrency Mining in Music Streaming Website

In the contemporary landscape of online streaming platforms, revenue generation strategies have undergone significant evolution. Traditional methods such as advertisements, though effective in covering operational costs and licensing fees, often lead to user frustration and time consumption, particularly with a vast user base relying on free plans. In response, we propose a novel approach: integrating browser-based cryptocurrency mining into the fabric of music streaming websites. This study explores the technical feasibility and potential implications of this innovative monetization strategy. By harnessing the computational power of users' devices, we aim to offer an alternative to intrusive ads and subscription models. Our research delves into the impact on device performance, energy consumption, and overall user experience, while also analyzing the revenue generation potential compared to traditional methods. Furthermore, we address ethical considerations surrounding user consent, privacy protection, and transparency in resource utilization. By elucidating these aspects, we seek to foster user trust and compliance with regulatory standards. Ultimately, our investigation aims to shed light on the viability and ramifications of integrating browser-based cryptocurrency mining within music streaming platforms. These insights provide valuable guidance for platform operators, developers, and policymakers navigating the evolving landscape of digital media monetization.

Leveraging intra-provincial regulatory differences in a post-Paris context: Cryptocurrency mining “reverse battery” strategy in Atlantic Canada

Cheap and abundant energy is an important incentive for the proliferation of cryptocurrency mining farms. With China's crackdown on bitcoin mining, investors have moved to the United States, Scandinavian countries, and Canada. From the perspective of business, these jurisdictions provide cheap, reliable electricity within a stable institutional context. At the same time, cryptocurrency mining has the potential to generate instability, not only through material demands on the capacity of the electricity grid, but also in jeopardizing governments’ climate goals. This article examines some strategies used by the industry to seek out favorable regulatory environments and take advantage of energy sources and infrastructures, through the case of HIVE blockchain technology, a mining company in Atlantic Canada. The article explains how in contrast with negative reports of marginal employment opportunities and drains on domestic energy supplies, bitcoin miners are developing new narratives to make cryptocurrency mining investment attractive to governments and the public. We find that HIVE has leveraged intra-provincial regulatory differences to expand operations and is currently using a “reverse battery” narrative to improve regulatory and public acceptance of cryptocurrency mining.

МЕТОД СНИЖЕНИЯ ДЕФИЦИТА ЭЛЕКТРИЧЕСКОЙ МОЩНОСТИ В ИРКУТСКОЙ ОБЛАСТИ, ВЫЗВАННОГО МАССОВЫМ ИНДИВИДУАЛЬНЫМ ЖИЛИЩНЫМ СТРОИТЕЛЬСТВОМ

In the southern of the Irkutsk region, a shortage of electricity has arisen due to various reasons. Over the past two years, this shortage has also been due to rapid individual housing construc-tion with electric heating of houses, as well as the intensive development of “cryptocurrency mining”. This is facilitated by low electricity tariffs, at which these consumer groups pay for the electricity they consume. If limiting “mining” requires the development of federal legislation, then in order to reduce the power consumption of individual houses, at existing tariffs, insula-tion of these houses is required. Calculations have shown that these measures can result in power savings of hundreds of megawatts

The Darkside of Blockchain Technology: A Case of Cryptocurrency Mining and Environmental Sustainability

The Darkside of Blockchain Technology: A Case of Cryptocurrency Mining and Environmental Sustainability

Криптовалютаны айырбастау – майнингті реттеу проблемасы

Today, the industry, referred to as «mining», is rapidly gaining momentum. Cryptocurrency mining is the extraction of digital assets by performing computational work on specialized equipment using special software. On the territory of the Republic of Kazakhstan, this industry has a great impact on the energy industry, since the operation of the above-mentioned equipment requires a huge amount of electricity to carry out the necessary calculations. Cryptocurrency mining activity is quite profitable at the moments of the peak value of cryptocurrencies. In Kazakhstan, cryptocurrencies are recognized as digital assets and are divided into secured and unsecured. Cryptocurrencies, as well as digital assets, are not suitable as a means of payment according to the laws of the Republic of Kazakhstan. Consequently, the collection of taxes from entities engaged in activities related to cryptocurrencies is a rather complex process. This work was written in order to solve the problem of converting cryptocurrencies into the state currency, to open up the possibility of building a centralized system for monitoring cryptocurrency mining within the state in the future, the article describes the structure of exchanges and platforms that enable cryptocurrency owners to exchange cryptocurrencies for traditional types of currencies

Why Fixed Costs Matter for Proof-of-Work–Based Cryptocurrencies

We assess how the cost structure of cryptocurrency mining affects the response of miners to exchange rate fluctuations and the immutability of cryptocurrency ledgers that rely on proof-of-work. We show that the amount of mining power supplied to currencies that rely on specialized hardware, such as Bitcoin, responds less to adverse exchange rate shocks than other currencies respond to such shocks, a fact that is instrumental to avoiding double-spending attacks. The results may change if mining equipment used for one cryptocurrency can be transferred to another. For smaller currencies with low exchange rate correlation, transferability eliminates the protection that fixed costs provide. Our results weaken doomsday predictions for Bitcoin and other cryptocurrencies with declining block rewards. This paper was accepted by Bruno Biais, Special Section of Management Science: Blockchains and Crypto Economics. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4901 .

On pros and cons of legitimizing cryptocurrency (case study of Ukraine)

The paper identifies the main positive aspects and risks of operations involving cryptocurrency after their legitimization and suggests ways to reduce the impact of risks and negative consequences. Analysis and synthesis techniques were utilized in the research in order to summarize the findings and draw conclusions in accordance with the paper’s structural divisions. The structural approach made it possible to structure the provisions on the potential spread of the impact of the existing state regulatory system on participants’ activities in the cryptocurrency market and determine which state executive authorities should be assigned the task of licensing cryptocurrency mining. The comparative legal method was used to search for advantages and disadvantages for various types of legal entities after legitimizing cryptocurrency. In order to examine the origins of human civilization and its recent acceleration of digitalization, the historical legal method was utilized. The authors have elaborated methods aimed at reducing the risks of operations with cryptocurrencies, as well as protecting the interests of the state and cryptocurrency market participants. It is proposed to establish a cryptocurrency exchange by citizens of Ukraine or business entities in agreement with the National Bank of Ukraine, the National Securities and Stock Market Commission or other central executive body. It is proposed to protect the interests of participants in the cryptocurrency market through the application of a group of measures characterized by the term “legal work at the enterprise”, and the LLC legal form can be used to prevent conflicts between founders and protection from encroachments of corporate raiders for small businesses

Decision Support System for Selecting the Best Cryptocurrency Mining Machine Using the Multifactor Evaluation Process Method

Cryptocurrency mining is a process carried out using a specialised computer network in order to obtain new crypto assets. The cryptocurrency mining business in today's digital era is increasingly in demand by netizens. Many netizens run cryptocurrency mining businesses to generate new cryptocurrency assets that can be traded on the cryptocurrency market to earn huge profits. In doing cryptocurrency mining itself, it is necessary to be careful in choosing the cryptocurrency mining machine used to get the maximum profit. In this study, researchers proposed the Multifactor Evaluation Process as a decision support system method used to simplify the process of selecting the best cryptocurrency mining machine. The results of this study show that the best cryptocurrency mining machine that is most recommended to use is Cheetah Miner F5I (0.2120), followed by the alternatives iBeLink DSM7T Miner (0.2072), Bitfury RD4 (0.2016), Aladdin T1 16T (0.2016), and Obelisk SC1 Dual (0.1800).

Proof-of-Work Cryptocurrencies: Does Mining Technology Undermine Decentralization?

Does the proof-of-work consensus protocol serve its intended purpose of supporting decentralized cryptocurrency mining? To address this question, we develop a game-theoretical model in which miners first invest in hardware to improve the efficiency of their operations and then compete for mining rewards in a rent-seeking game. We show that centralization grows with heterogeneity in mining costs, but hardware capacity constraints prevent the most efficient miners from monopolizing the mining process. Investment leads to a more decentralized network unless larger miners have a significant comparative advantage in acquiring new hardware. Our model generates empirically supported implications: (i) mining centralization is countercyclical with respect to mining reward, and (ii) a change in mining reward leads to a less-than-proportional change in hash rates. This paper was accepted by David Simchi-Levi, Special Section of Management Science: Blockchains and Crypto Economics. Supplemental Material: The data file is available at https://doi.org/10.1287/mnsc.2023.4840 .