Source: Schwab Center for Financial Research. Tokenomics, a blend of "token" and "economics," defines the model governing a cryptocurrency's supply, distribution, utility, and incentives. An inefficient Bitcoin miner production process is defined as mining operations that yield low amounts of Bitcoin relative to high energy costs. This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. Investing involves risk, including loss of principal. For illustrative purposes only and are no guarantee of future performance or success and are not intended to be, nor should they be construed as, a recommendation to buy, sell, or continue to hold any investment.

Note: Miner production is an estimated cost of how much energy and data center equipment is needed to produce a bitcoin. Efficient miners often have lower cost energy and more efficient data center equipment, which has historically resulted in a lower production price for bitcoin. Inefficient miners have higher cost energy and less efficient data center equipment, which has historically resulted in a higher cost of production. Market cap to gross domestic product is the US Dollar value of the total circulating supply of a cryptocurrency divided by the total fees generated across a blockchain network. Market cap to transfer volume is the US Dollar value of the total circulating supply of a cryptocurrency divided by trailing 1-year sum of the US dollar value of amount of cryptocurrency that has been transferred from one cryptocurrency address to another.