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Abstract

A lot of interest has recently been put into the so-called ‘virtual cryptographic currencies’, commonly known as cryptocurrencies, along with its surrounding market. The blockchain technology that stands behind them is also becoming increasingly popular. From the perspective of maintaining energy security, an important issue is the process of mining individual cryptocurrencies, which is associated with very high energy consumption. This operation is usually related to the approval of new blocks in the blockchain network and attaching them to the chain. This process is carried out through performing complex mathematical operations by various devices, which in turn require high power and respectively consume a lot of energy. The impact of cryptocurrency miners on the power and energy demand level might gradually increase over time, therefore this issue shouldn’t be ignored. Comparing the above information in parallel with the growing need for providing demand side response (DSR) services in the Polish Power System, raises the question whether devices used for mining cryptocurrencies can be used for the purpose of balancing the power system. This paper presents an analysis of the possibility to provide the demand side response services by groups of cryptocurrency miners users. The analysis was carried out taking basic functional, technological and economical aspects of these devices’ operations into account.

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Authors and Affiliations

Damian Mrowiec
Piotr Saługa
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Abstract

This paper applies recently developed procedures to monitor and date so-called “financial market dislocations”, defined as periods in which substantial deviations from arbitrage parities take place. In particular, we use a cointegration perspective to focus on deviations from the triangular arbitrage parity for exchange rate triplets. Due to increasing attention on and importance of mispricing in the market for cryptocurrencies, we include the cryptocurrency Bitcoin in addition to fiat currencies in our analysis. We do not find evidence for substantial deviations from the triangular arbitrage parity when only traditional fiat currencies are considered, but document significant deviations from triangular arbitrage parities in the newer market for Bitcoin. We tentatively confirm the importance of our results for portfolio strategies by showing that a currency portfolio that trades based on our detected break-points outperforms a simple buy-and-hold strategy.
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Authors and Affiliations

Julia Reynolds
1
ORCID: ORCID
Leopold Sögner
2 3 4
ORCID: ORCID
Martin Wagner
5 6 7
ORCID: ORCID

  1. U.S. Securities and Exchange Commission, Washington, USA
  2. Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria
  3. Vienna Graduate School of Finance, Vienna, Austria
  4. NYU Abu Dhabi , Emirate of Abu Dhabi, United Arab Emirates
  5. Department of Economics, University of Klagenfurt, Austria
  6. Bank of Slovenia, Ljubljana
  7. Institute for Advanced Studies, Vienna

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