Bitcoin and other cryptocurrencies are demanded by those who wish to use them to complete transactions or those who wish to speculate on their future value. Bitcoins are supplied by thousands of competing miners who harness computing power to “dig” for Bitcoins by solving math problems. The more Bitcoins mined, the more difficult the math problems become.

a. Use the information provided in the chapter opener to explain why the supply curve of Bitcoins is likely to be upward-sloping.

b. Increases in computing speed have, all else being equal, made it easier for miners to mine Bitcoins. Draw a properly labeled graph showing how an increase in computing power affects the supply of Bitcoins.

c. Suppose that the only change in the market for Bitcoins is the change described in part (b). How would that change affect the equilibrium price and quantity of Bitcoins sold?