Cost-aware Blockchain Mining Strategy: Dynamic Energy Pricing (DEP) Model

The rapid growth of blockchain technology has sparked significant interest in understanding the profitability of blockchain mining. As the cornerstone of decentralized systems, mining plays a crucial role in securing transactions and maintaining the integrity of the blockchain. However, the cost-effectiveness of mining operations and the factors that influence profitability remain subjects of great importance and ongoing research. This paper presents an analysis of blockchain mining profitability, considering the dynamic nature of cryptocurrency prices, network difficulty, and energy prices. Mining profitability is highly sensitive to fluctuations in electricity prices, prompting miners to strategically allocate resources to maximize their returns. Our study focused on minimizing the energy expenditures required for mining by leveraging the dynamic pricing of energy. The experimental findings revealed that utilizing dynamic energy pricing strategies, as opposed to fixed pricing models, resulted in an average energy cost reduction of up to 34%.