Bitcoin Mining and Electricity Consumption 


We develop a dynamic equilibrium model for Bitcoin mining to characterize miners’ optimal entry and exit strategy with technology innovation. The model can jointly calibrate to the co-movements of computing power, electricity consumption of Bitcoin network, and mining revenue. Our model reveals how miners’ electricity consumption is endogenously affected by the Bitcoin price.


Steven Kou is a Questrom Professor in Management and Professor of Finance at Boston University. He teaches courses on FinTech and quantitative finance. Currently he is a co-area-editor for Operations Research and a co-editor for Digital Finance, and has served on editorial boards of many journals, such as Management Science, Mathematics of Operations Research, and Mathematical Finance. He is a fellow of the Institute of Mathematical Statistics and won the Erlang Prize from INFORMS in 2002. Some of his research results have been incorporated into standard MBA textbooks.  


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