Dynamics of miners' decision making under taxation in blockchain

Abstract

Since participation in blockchain mining requires a lot of computational power and consumes a large amount of electricity, which leads to a significant level of carbon emissions, governments of some nations frame the policy about blockchain mining, such as cracking down on or imposing an additional tax for mining. We propose a dynamical model of miners' decision-making under the imposition of both an income and a green tax. We show that the mining reward affects the qualitative change of the behaviors of miners depending on the income tax rate and that both a saddle-node bifurcation and a transcritical bifurcation occur in the model.