Rational Miner Behaviour, Protocol Stability, and Time Preference: An Austrian and Game-Theoretic Analysis of Bitcoin's Incentive Environment

TL;DR

This paper combines Austrian economic theory and game theory to analyze how protocol mutability affects miner incentives, emphasizing that immutable protocols like Bitcoin foster stability and long-term strategic planning.

Contribution

It introduces a novel integration of Austrian capital theory with game theory to explain the importance of protocol immutability for blockchain stability.

Findings

Mutable protocols increase effective time preference.

Immutable protocols promote cooperative and long-term strategies.

Bitcoin's fixed protocol acts as an institutional anchor.

Abstract

This paper integrates Austrian capital theory with repeated game theory to examine strategic miner behaviour under different institutional conditions in blockchain systems. It shows that when protocol rules are mutable, effective time preference rises, undermining rational long-term planning and cooperative equilibria. Using formal game-theoretic analysis and Austrian economic principles, the paper demonstrates how mutable protocols shift miner incentives from productive investment to political rent-seeking and influence games. The original Bitcoin protocol is interpreted as an institutional anchor: a fixed rule-set enabling calculability and low time preference. Drawing on the work of Bohm-Bawerk, Mises, and Hayek, the argument is made that protocol immutability is essential for restoring strategic coherence, entrepreneurial confidence, and sustainable network equilibrium.