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http://dx.doi.org/10.13089/JKIISC.2018.28.2.303

Bitcoin Mining Profitability Model and Analysis  

Lee, Jinwoo (Myongji University)
Cho, Kookrae (DGIST)
Yum, Dae Hyun (Myongji University)
Publication Information
Journal of the Korea Institute of Information Security & Cryptology / v.28, no.2, 2018 , pp. 303-310 More about this Journal
Abstract
Bitcoin (BTC) is a cryptocurrency proposed by Satoshi Nakamoto in 2009. Bitcoin makes its transactions with no central authorities. This decentralization is accomplished with its mining, which is an operation that makes people compete to solve math puzzles to include new transactions into block, and eventually block chains (ledger) of bitcoin. Because miners need to solve a complex puzzles, they need a lot of computing resources. In return for miners' resources, bitcoin network gives newly minted bitcoins as a reward to miners when they succeed in mining. To prevent inflation, the reward is halved every 4 years. For example, in 2009 block reward was 50 BTC, but today, the block reward is 12.5 BTC. On the other hands, exchange rate for bitcoin and Korean Won (KRW) changed drastically from 924,000 KRW/BTC (January 12th, 2017) to 16,103,306 KRW/BTC (December 10th, 2017), which made mining more attractive. However, there are no rigorous researches on the profitability of bitcoin mining. In this paper, we evaluate the profitability of bitcoin mining.
Keywords
Cryptocurrency; Bitcoin; Mining; Profitability;
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