Ransomware Activity, Demand for Blockchain Settlement and the Upper Bound of Congestion-Induced Mining Reward

I examine blockchain congestion episodes caused by more than 4,400 triggers for ransomware attacks over a two-year period. When demand for settlement exceeds blockchain capacity, blockchain users engage in fee competition to prioritize their transaction settlement. A typical surge in ransomware activity causes transaction fees to increase by 2.1% and up to 28% in extreme cases. Consistent with theory literature, some users forego blockchain settlement when transaction fees increase. An event study around an extreme spike in ransomware activity supports the findings of the main analysis.