An Equilibrium Model of the Market for Bitcoin Mining
Julien Prat () and
No 6865, CESifo Working Paper Series from CESifo Group Munich
We propose a model which uses the Bitcoin/US dollar exchange rate to predict the computing power of the Bitcoin network. We show that free entry places an upper-bound on mining revenues and we devise a structural framework to measure its value. Calibrating the model’s parameters allows us to accurately forecast the evolution of the network computing power over time. We establish the accuracy of the model through out-of-sample tests and investigation of the entry rule.
Keywords: Bitcoin; blockchain; miners; industry dynamics (search for similar items in EconPapers)
JEL-codes: D41 L10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene, nep-for, nep-ict, nep-mon and nep-pay
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Working Paper: An Equilibrium Model of the Market for Bitcoin Mining (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6865
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