IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2022y2022i5id817p377-397.html
   My bibliography  Save this article

Bitcoin Transaction Fees, Miners' Revenue, Concentration and Electricity Consumption: A Failing Ecosystem

Author

Listed:
  • Frederik Rech
  • Chen Yan
  • Amon Bagonza
  • Lubomir Pinter
  • Hussam Musa

Abstract

The research and investment community seems to ignore the long-term sustainability of Bitcoin, which is reflected in four flaws: transaction fees, miners' revenue, concentration and electricity consumption. While most of the authors have aimed to examine one topic at a time, with a particular interest in electricity consumption and carbon footprint, the aim of this paper is to examine all these issues simultaneously to provide a more comprehensive view on long-term sustainability of Bitcoin. This paper looks at these flaws and reveals why Bitcoin is not sustainable in the long run, how decentralization is being lost, how the design is putting artificial and unrealistic pressure on the ecosystem, while all being powered by an unjustifiable amount of dirty electricity sources. Our main findings are as follows. Firstly, transaction fees are already high and set to increase in time, further discriminating small transactions against big ones. Secondly, miners' revenue comes mostly from the block reward. The block reward is the main income source for miners, but is set to be cut on a regular basis, making miners' revenue not sustainable in the long run. Thirdly, miner concentration is already an issue, with a possibility of deepening even more and diminishing the idea of decentralization. Fourthly, the high electricity demand and the associated carbon footprint thus cannot be justified by any means. We deem our results useful for overall policy and regulatory implications.

Suggested Citation

  • Frederik Rech & Chen Yan & Amon Bagonza & Lubomir Pinter & Hussam Musa, 2022. "Bitcoin Transaction Fees, Miners' Revenue, Concentration and Electricity Consumption: A Failing Ecosystem," Prague Economic Papers, Prague University of Economics and Business, vol. 2022(5), pages 377-397.
    • Handle: RePEc:prg:jnlpep:v:2022:y:2022:i:5:id:817:p:377-397
    DOI: 10.18267/j.pep.817
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.817.html
    Download Restriction: free of charge
    File URL: http://pep.vse.cz/doi/10.18267/j.pep.817.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.pep.817?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tang, Zi, 2015. "An integrated approach to evaluating the coupling coordination between tourism and the environment," Tourism Management, Elsevier, vol. 46(C), pages 11-19.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chengkun Huang & Feiyang Lin & Deping Chu & Lanlan Wang & Jiawei Liao & Junqian Wu, 2021. "Coupling Relationship and Interactive Response between Intensive Land Use and Tourism Industry Development in China’s Major Tourist Cities," Land, MDPI, vol. 10(7), pages 1-17, July.
    2. Dongchuan Wang & Wengang Chen & Wei Wei & Broxton W. Bird & Lihui Zhang & Mengqin Sang & Qianqian Wang, 2016. "Research on the Relationship between Urban Development Intensity and Eco-Environmental Stresses in Bohai Rim Coastal Area, China," Sustainability, MDPI, vol. 8(4), pages 1-15, April.
    3. Adina Letiţia Negruşa & Valentin Toader & Aurelian Sofică & Mihaela Filofteia Tutunea & Rozalia Veronica Rus, 2015. "Exploring Gamification Techniques and Applications for Sustainable Tourism," Sustainability, MDPI, vol. 7(8), pages 1-30, August.
    4. Yanli Gao & Hongbo Li & Yan Song, 2021. "Interaction Relationship between Urbanization and Land Use Multifunctionality: Evidence from Han River Basin, China," Land, MDPI, vol. 10(9), pages 1-21, September.
    5. Yanting Zheng & Jing He & Wenxiang Zhang & Aifeng Lv, 2023. "Assessing Water Security and Coupling Coordination in the Lancang–Mekong River Basin for Sustainable Development," Sustainability, MDPI, vol. 15(24), pages 1-20, December.
    6. Dalia Perkumienė & Rasa Pranskūnienė & Milita Vienažindienė & Jurgita Grigienė, 2020. "The Right to A Clean Environment: Considering Green Logistics and Sustainable Tourism," IJERPH, MDPI, vol. 17(9), pages 1-23, May.
    7. Jiaguo Liu & Jinxia Zhou & Fan Liu & Xiaohang Yue & Yudan Kong & Xiaoye Wang, 2019. "Interaction Analysis and Sustainable Development Strategy between Port and City: The Case of Liaoning," Sustainability, MDPI, vol. 11(19), pages 1-25, September.
    8. Liang Zhu & Lingxue Zhan & Shaobo (Kevin) Li, 2021. "Is sustainable development reasonable for tourism destinations? An empirical study of the relationship between environmental competitiveness and tourism growth," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 66-78, January.
    9. Jia Tao & Meng Yang & Jing Wu, 2022. "Coupling Coordination Evaluation of Lakefront Landscape Spatial Quality and Public Sentiment," Land, MDPI, vol. 11(6), pages 1-29, June.
    10. Xuanming Ji & Kun Wang & Tao Ji & Yihua Zhang & Kun Wang, 2020. "Coupling Analysis of Urban Land Use Benefits: A Case Study of Xiamen City," Land, MDPI, vol. 9(5), pages 1-20, May.
    11. Qiangyi Li & Lan Yang & Fangxin Jiang & Yangqing Liu & Chenyang Guo & Shuya Han, 2022. "Distribution Characteristics, Regional Differences and Spatial Convergence of the Water-Energy-Land-Food Nexus: A Case Study of China," Land, MDPI, vol. 11(9), pages 1-28, September.
    12. Beibei Hu & Airong Xu & Xianlei Dong, 2022. "Evaluating the Comprehensive Development Level and Coordinated Relationships of Urban Multimodal Transportation: A Case Study of China’s Major Cities," Land, MDPI, vol. 11(11), pages 1-28, November.
    13. Mirela Ștefănică & Christiana Brigitte Sandu & Gina Ionela Butnaru & Alina-Petronela Haller, 2021. "The Nexus between Tourism Activities and Environmental Degradation: Romanian Tourists’ Opinions," Sustainability, MDPI, vol. 13(16), pages 1-19, August.
    14. Zhiqiang Zhang & Ling Li & Qiuyu Guo, 2022. "The Interactive Relationships between the Tourism-Transportation-Ecological Environment System of Provinces along the ‘Silk Road Economic Belt’ in China," Sustainability, MDPI, vol. 14(5), pages 1-33, March.
    15. Yiming Liu & Sunhee Suk, 2021. "Coupling and Coordinating Relationship between Tourism Economy and Ecological Environment—A Case Study of Nagasaki Prefecture, Japan," IJERPH, MDPI, vol. 18(23), pages 1-12, December.
    16. Jing Li & Hong Fang & Siran Fang & Sultana Easmin Siddika, 2018. "Investigation of the Relationship among University–Research Institute–Industry Innovations Using a Coupling Coordination Degree Model," Sustainability, MDPI, vol. 10(6), pages 1-18, June.
    17. Can Tansel TUGCU & Mert TOPCU, 2018. "The impact of carbon dioxide (CO2) emissions on tourism: Does the source of emission matter?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(614), S), pages 125-136, Spring.
    18. Aleksander Panasiuk & Halyna Zubrytska, 2021. "Information Support of Russian Media for the Tourist Destination of Crimea," Sustainability, MDPI, vol. 13(6), pages 1-23, March.
    19. Ming Hao & Gang Li & Changyou Chen & Liutao Liang, 2022. "A Coupling Relationship between New-Type Urbanization and Tourism Resource Conversion Efficiency: A Case Study of the Yellow River Basin in China," Sustainability, MDPI, vol. 14(21), pages 1-24, October.
    20. Hu, Beibei & Zhang, Shuang & Ding, Yang & Zhang, Min & Dong, Xianlei & Sun, Huijun, 2021. "Research on the coupling degree of regional taxi demand and social development from the perspective of job–housing travels," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 564(C).

    More about this item

    Keywords

    Bitcoin; transaction fees; miners' revenue; miner concentration; Electricity consumption;
    All these keywords.

    JEL classification:

    • E14 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Austrian; Evolutionary; Institutional
    • F39 - International Economics - - International Finance - - - Other
    • G19 - Financial Economics - - General Financial Markets - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2022:y:2022:i:5:id:817:p:377-397. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.