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Rod Garratt
Maarten Van Oordt
Bank of Canada, University of California Santa Barbara
2020
Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies

Authors 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. The authors 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.