Conference Agenda

We document that blocks on the blockchain are rarely filled to capacity, even though
there is excess demand for block space by fee-paying users who want their transactions to
be recorded. In spite of this, higher fee orders are not always prioritized. We show these
patterns are consistent with miners exercising market power: If users believe that only high
fee transactions will be executed expeditiously we show how strategic capacity management
can be used to extract higher fee revenue. Using a novel data set, we provide evidence
consistent with this market power, and estimate that mining pools have extracted least 300
million USD a year in excess fees by making processing capacity artificially scarce.