Banff International Research Station for Mathematical Innovation and Discovery
Abstract
Bitcoin users can offer fees to miners who record their transactions in the Blockchain. We document high variation of bitcoin fees, not only over time, but also within blocks. Further,
the blockchain rarely runs at capacity, even though fees tend to be higher when blocks are fuller, so miners appear to be leaving money on the table. We present a simple model of
price discrimination to explain our results. We note that mining pools facilitate collusive equilibria, and estimate that they have extracted least 200 million USD a year in excess fees
by making processing capacity scarce.Non UBCUnreviewedAuthor affiliation: University of CalgaryFacult
