An Equilibrium Model of the Market for Bitcoin Mining

Julien Prat and Walter Benjamin ()
Additional contact information
Walter Benjamin: CREST; Université Paris-Saclay

No 2017-15, Working Papers from Center for Research in Economics and Statistics

Abstract: 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)
Pages: 26 pages
Date: 2017-11-29
New Economics Papers: this item is included in nep-ene, nep-for, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://crest.science/RePEc/wpstorage/2017-15.pdf CREST working paper version (application/pdf)

Related works:
Journal Article: An Equilibrium Model of the Market for Bitcoin Mining (2021)
Working Paper: An Equilibrium Model of the Market for Bitcoin Mining (2021)
Working Paper: An Equilibrium Model of the Market for Bitcoin Mining (2018)
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