Bitcoin Nash Equilibrium
http://www.atimes.com/article/bitcoins-high-energy-usage-could-be-a-risk-worth-taking/
Bitcoin mining has been a hot trend, both literally and metaphorically. The mining process currently relies on an algorithm called Proof of Work. This involves a using a network of computers to reach a consensus on Bitcoin transactions. The way in which consensus is achieved is computationally expensive, because it involves solving a series of puzzles. Bitcoin mining is very popular because miners are rewarded with more Bitcoin when they successfully validate a transaction by finding a solution for the puzzle everyone is working towards solving, allowing everyone else to progress to the next puzzle. Thus, the energy consumption from miners has increased significantly, to a level concerning for scientists.
Bitcoin mining is inherently a game: The miners strive to achieve a Nash Equilibrium. More specifically, we can think of the mining as a cooperation game, where when the miners agree on finding the solutions to validate the same transactions, they earn more rewards. However, when miners deviate and solve puzzles different from other miners, everyone loses, because they cannot progress in line with the rest of the blockchain. There are also puzzles that yield fewer rewards than others. Maybe the payoff matrix looks something like this:
A B
A 6,6 0,0
B 0,0 2,2
When miners work together to solve puzzle A for transaction A, they will earn more rewards than solving puzzle B for transaction B.
Furthermore, we can think of mining as infinitely repeated games, because rewards can accumulate as miners solve more and more puzzles!