Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies

【Author】 Garratt, Rodney J.; van Oordt, Maarten R. C.

【Source】MANAGEMENT SCIENCE

【影响因子】6.172

【Abstract】We assess how the cost structure of cryptocurrency mining affects the response of miners to exchange rate fluctuations and the immutability of cryptocurrency ledgers that rely on proof-of-work. We show that the amount of mining power supplied to currencies that rely on specialized hardware, such as Bitcoin, responds less to adverse exchange rate shocks than other currencies respond to such shocks, a fact that is instrumental to avoiding double-spending attacks. The results may change if mining equipment used for one cryptocurrency can be transferred to another. For smaller currencies with low exchange rate correlation, transferability eliminates the protection that fixed costs provide. Our results weaken doomsday predictions for Bitcoin and other cryptocurrencies with declining block rewards.

【Keywords】cryptocurrency; blockchain; exchange rates; double-spending attacks

【发表时间】2023 2023 SEP 19

【收录时间】2023-10-15

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-挖矿分析