PROFESSOR DR MIN DAI
The Hong Kong Polytechnic University & National University of Singapore

 

Min Dai is Chair Professor in Applied Statistics and Financial Mathematics, Department of Applied Mathematics, The Hong Kong Polytechnic University (HKPolyU). Prior to joining HKPolyU in 2021, he taught at National University of Singapore and Peking University after receiving his PhD degree from Fudan University in 2000. His research focuses on financial derivative pricing, portfolio selection with market imperfections, corporate finance, and financial technology. He published in peer-reviewed journals of different disciplines, such as Journal of Econometrics, Journal of Economic Theory, Management Science, Mathematical Finance, Review of Financial Studies, and SIAM Journals. Currently he is a Co-editor of Digital Finance and serves in editorial boards of many academic journals, including Finance and Stochastics, Journal of Economic Dynamics and Control, SIAM Journal on Financial Mathematics, and Mathematics and Financial Economics.

 

BITCOIN MINING AND ELECTRICITY CONSUMPTION

We propose a dynamic industry equilibrium model for Bitcoin electricity consumption in a general framework, including Bitcoin miners’ optimal entry and exit with technology innovation. By adopting average operating costs as an approximation to the true operating costs, we overcome the difficulty of strong path-dependency due to the interaction among entry, exit, and technology innovation. The model can capture both the upside and downside co-movements of miners’ computing power, electricity consumption, and mining revenue. Our model shows that the Bitcoin electricity consumption will not grow indefinitely, with the ratio of Bitcoin electricity consumption to the miners’ revenue fluctuating within a range. This work is joint with Steven Kou, Shuaijie Qian, and Ling Qin.