- This paper presents an effective technique for compacting a large sequence of input vectors into a much smaller one such that when the two sequences are applied to any circuit, the resulting power dissipations are nearly the same. Specifically, this paper introduces the hierarchical modeling of Markov chains as a flexible framework for capturing not only complex spatiotemporal correlations, but also dynamic changes in the sequence characteristics. The new framework has a high degree of adaptability, i.e. the hierarchical model is dynamically grown according to the sequence behavior. Experimental results demonstrate that large compaction ratios can be obtained without significant loss in accuracy (less than 5% on average) for power estimates.