Bitcoin mining: converting computing power into cash flow

Abstract

Bitcoin is the world’s leading cryptocurrency, with a market capitalization briefly exceeding $300 billion. This hints at Bitcoin’s
\namorphous nature: is this a monetary or a corporate measure? Hard values become explicit in the processing of transactions and
\nthe digital mining of Bitcoins. Electricity is a primary input cost. Bitcoins earned are often used to circumvent local currency
\ncontrols and acquire US dollars. For the period August 2010 to February 2018, we examine the components of Bitcoin mining
\nrevenues, their statistical contribution to daily changes, and to its variance. We provide evidence that Bitcoin transaction processing
\nis capacity constrained.