Cost of Production Model

Prediction Accuracy pre and during Russia-Ukraine Conflict

Done by Kiran S, 2113050, PGDM, II Year
Russia-Ukraine
Conflict
• Russia Ukraine Conflict began when Russia
annexed Crimea from Ukraine in 2014.
• Russia opposed Ukraine’s efforts to join
NATO.
• Invasion of Russia over Ukraine took place
on February 24, 2022.
• The conflict has strained relations between
Russia and Western countries, particularly the
United States and European Union.
• The conflict has affected crypto currency
prices.
• The conflict has caused inflation in prices
due to supply chain disruption.
Miners in
consideration
Name of
the miner Hash Rate GH/s W/GH/s
• Four bitcoin miners have been considered
for the study: Antminer 56Th/s for a power
• Antiminer S17 S17 consumption of 2520W 56000 0.045
• Antiminer S17 pro
Antminer  53Th/s for a power
• Antiminer S19 pro
S17 Pro consumption of 2094W 53000 0.039509
• Antiminer S19 pro
Antminer 95 TH/s for a power
S19 consumption of 3250 watts 95000 0.034211
Antminer 198Th/s for a power
S19 Pro consumption of 5,445W 198000 0.0275

AS h
Cost of
Production
Model Predicted Price:

• Factors in consideration:
• Market Price ($) Marginal Cost of per unit of mining power:
• Hash Rate (TH/s)
• Difficulty Level (GH/s)
• Block Reward (6.25
BTC/block)
• Electricity Cost ($0.165 Bitcoin production per day:
per KWH)
Cost of Crypto Price during Russia-Ukraine Conflict

Production 60000

Model 50000

• Period under study: 01 Jan 2022 to 31 40000

Dec 2022
• Market price of Bitcoin has been very 30000
volatile since 01 Jan 2022.

Price (in $)
Predicted Price
Market Price
• Market price of Bitcoin began to fall
after April 2022. 20000

• Predicted prices offer profit up to 09

May 2022. 10000

• After 09 May 2022, market prices

have witnessed a serious downfall.
• The cost of production model is good
up to 09 May 2022.
0
22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22
n- n- n- b- b- r- r- r- r- y- y- n- n- l- l- l- g- g- p- p- t- t- v- v- c- c- c-
J- a -Ja -Ja -Fe -Fe -Ma -Ma -Ap -Ap Ma Ma -Ju -Ju 2-Ju 6-Ju 0-Ju -Au -Au -Se -Se -Oc -Oc -No -No -De -De -De
1 15 29 12 26 2 6 9 23 7- 1- 4 18
1 2 2 1 3 13 27 10 24 8 22 5 19 3 17 31

• After 09 May 2022, the model is not Date

suitable to predict prices.
Cost of Ratio values during Russia-Ukraine Conflict

Production
1.8

Model
1.6

1.4

• Ratio values to combine both the 1.2

curves.
• Value above 1 proves the model to 1
be good.
• If ratio value is less than 1, the 0.8

model is not suitable.

0.6
• The model works good up to 09
May 2022.
0.4
• After 09 May 2022, market prices
have witnessed a serious downfall. 0.2

• The cost of production model is

good up to 09 May 2022. 0
22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22
n- an- an- eb- eb- eb- ar- ar- ar- pr- pr- ay- ay- ay- un- un- un- Jul- Jul- Jul- ug- ug- ug- ep- ep- ct- ct- ct- ov- ov- ov- ec- ec- ec-
• Overall, the conflict has seriously a
J J J
1 3
A A J J J - - -
2 3
O O O
1- 12- 23- 3-F 14-F 25-F 8-M 9-M 0-M 10- 21- 2-M 3-M 4-M 4- 15- 26- 7 18 29 9-A 0-A 1-A 11-S 22-S 3- 14- 25- 5-N 6-N 7-N 8-D 19-D 30-D
1 2
1 2
affected Bitcoin prices.
Prediction Accuracy pre and during
conflict

Pre-conflict Prediction Accuracy During conflict Prediction Accuracy

77.75% 62.38%
Prediction Accuracy pre and during conflict
• Significant difference in Prediction Accuracy
• So, model not good for prediction during the conflict.

Means plot from T-test

0.900000000000000
0.800000000000000

Mean of Accuracy
0.700000000000000
0.600000000000000
0.500000000000000
0.400000000000000
0.300000000000000
0.200000000000000
0.100000000000000
0.000000000000000
Pre conflict During conflict
Event
Variations in the model pre and during
conflict
Means Plot from T-test
1.400000000000000
1.200000000000000
1.000000000000000

Mean of Ratio
T-test shows Mean ratio value: So, the prediction 0.800000000000000
significant Pre conflict – 1.3 power is 0.600000000000000
difference in During conflict – 0.7 significantly 0.400000000000000
prediction power impacted by the
pre and during conflict. 0.200000000000000
conflict. 0.000000000000000
Pre Conflict During Conflict
Phenomenon
How can the model be
improved?
• The primary problem in the model is, the Cost of
Production model does not take into account the
previous day prices for prediction.
• Stock market prices depends on various factors. It
does not depend only on the cost of production. Eg. Rise
in cement stock prices during demonetization
• The model can be improved by taking more factors into
consideration for prediction of Bitcoin price.
• Time-series models can work in cases where there is a
sudden fall, as it takes into account the previous prices.
• Regression models can be implemented in case where
timely data is not available.
Thank You