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An Equilibrium Model of the Market for Bitcoin Mining


  • Julien Prat

    (CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

  • Benjamin Walter


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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Julien Prat & Benjamin Walter, 2021. "An Equilibrium Model of the Market for Bitcoin Mining," Post-Print hal-03506522, HAL.
  • Handle: RePEc:hal:journl:hal-03506522
    DOI: 10.1086/714445
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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