Bitcoins Energy Consumption Explained
Bitcoin is a digital currency powered by many computers around the world working to maintain the Bitcoin blockchain, a public database of all transactions on the network ever made. Bitcoin miners compete to officially record and verify the transaction and earn bitcoin as a reward.
These transactions are verified by solving complex cryptographic and mathematical problems for which Bitcoin miners use a lot of power. Together, they use more electricity than many countries. Heres a look at how much power it takes to create new bitcoins and how much power the Bitcoin network uses every day.
Is The Amount Of Bitcoin Fixed
Total Bitcoin supply and the maximum number of Bitcoins up for mining are fixed unless the stakeholders decide to do something about it. When Satoshi Nakamoto invented the virtual currency, he did it as an open-source project. For those worried about what happens when all Bitcoins are mined and the impact it could have, if stakeholders decide to change the code and increase the Bitcoin limit, its possible if the majority agrees. Despite the incentive to do so, the potential impact of such a change is highly debatable and controversial.
Block Reward And Halving:
Bitcoin miners receive Bitcoin as a reward for finding and validating a block of transaction. This is called mining rewards or block rewards. Now not all miners on the network will receive the block reward. Only the one who discovered the block will get the reward. It can be an individual with a large mining farm, or it can be a group of miners .
Just like block time and block reward, halving event is also part of the design. Just like how mining difficulty is adjusted automatically the halving event also occurs automatically every 210,000 blocks. This will simply cut down the reward to half.
So far the Bitcoin network has undergone three halving events. When Bitcoin was launched the block reward was 50 Bitcoin per block. In 2012 it halved to 25 Bitcoin. Likewise in 2016 it again halved to 12.5 BTC. Later in 2020 it was reduced from 12.5 to 6.25 Bitcoin.
The current Bitcoin block reward is 6.25 Bitcoin which will reduce to 3.125 BTC by 2024. This design will effectively lower the Bitcoin inflation rate over time. After the 2024 halving the Bitcoins inflation rate will eventually go to less than 1% a year.
The below table shows the projected bitcoin supply long time.
To keep track of when the Bitcoin halving event will occur visit . The site has all the information you need to know along with real time updates.
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Jumping In The Mining Pool
Then, you have to consider the competitive element of Bitcoin mining and how you are going to stand against the likes of professional server farms and mining companies going hell to leather on the blockchain day in, day out and thats where a mining pool comes in.
Its exactly what it sounds like any miners that you are happy to work with entering into an agreement with yourself that as you mine, you work on the same block in a chain and that once completed you split the bounty between yourselves equally.
So, the drawbacks and positives here are pretty open and easy to see. The pro is that you are completing blocks for submission faster than you would on your own, but the downside is that you are receiving a smaller share of the awarded Bitcoin. Again, this is entirely situation dependant, but if you decide that the time/cost/profit margins work better for your personal situation than they would if you were mining alone, then its a sound practice to go into. You can even enter into mining pools with cloud mining hosting companies if you want its dependant on your situation.
The Future Of Bitcoin Block Rewards
To limit inflation, bitcoin creator Satoshi Nakamoto designed bitcoin to ultimately have only 21 million bitcoins. This is why the size of bitcoin block rewards is halved after the creation of every 210,000 blocks, which takes around four years. At bitcoin’s inception in 2009, each block reward was worth 50 BTC. In May 2020, the block reward was halved a third time to 6.25 BTC. And as of May 2021, there were already 18.7 million bitcoins in existence, or nearly 90% of the total planned supply.
Ultimately, the block reward is scheduled to reach zero around May 2140, but mining will likely no longer be profitable long before that date is reached. As of April 2039, about 99.6% of bitcoins will already have been issued, and the block reward will be just 0.19531250 bitcoin. Along the way, transaction fees are expected to become the primary incentive for bitcoin miners.
Investing in Bitcoin and other Initial Coin Offerings is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in Bitcoin or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.
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What Happens When All Bitcoins Are Mined: The Impact On Stakeholders
At this time, no one can accurately predict what will happen when all available Bitcoins have been mined. Irrespective of any future efforts to change the underlying Bitcoin Core, experts continue to speculate on the future once the maximum limit is reached.
Several analysts favor the idea of using higher transaction fees to compensate for the absence of block rewards. New technologies will likely help to cut the cost of mining, which will eventually result in more profit for miners. Another theory suggests that Bitcoin platforms will only be used for large transactions of very high value, which will offer sufficient revenue to keep stakeholders satisfied. There are other theories as well which speculate about proof of stake and mining cartels.
From a stakeholders perspective, the following is a brief overview of what will happen when all Bitcoins are mined.
Mining Solo Or Joining A Pool
The second factor is whether you decide to mine solo or join a pool. When selecting a mining pool, it is crucial to consider its reputation and collective hash rate. The hash rate is the amount of power required to mine bitcoins at the moment. At present, mining pools, such as BTCC, F2Pool, Poolin, BTC.com, and Slush, control the majority of the networks hash rate.
Before joining a mining pool, thoroughly check if the bitcoin community trusts it. Some mining pools claim they are legitimate, but turn out to be scams. It is best to opt for well-established pools despite their higher-than-average signup rates. Such pools possess better hashing resources and block rewards for members. They are also more likely to have the infrastructure to fight off a cyber attack.
If you have enough computing power and the cost and availability of electric power is not an issue for you, you can opt to mine for bitcoins solo. Note, though, that it would most likely take you longer to generate a bitcoin than if you pool your resources with others. The only disadvantage of mining with others is that you share profits with the other members of the pool.
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How Many Bitcoins Are Mined Per Hour / Day / Week / Month / Year
On average the block time is 10 minutes = 6 blocks every hour = 144 blocks every day. The block reward currently is 6.25 BTC.
- About 37.5 BTC are mined per Hour.
- 900 Bitcoins are mined per Day.
- 6300 Bitcoins a mined per Week.
- 25200 Bitcoins are mined every Month and
- 302400 Bitcoins are mined every Year.
Note: This calculation is made based on the block reward and block time. The numbers may be slightly off. Also note that it will change every 4 years due to the halving event which is programmed.
Now coming to the last question. What happens when all the 21 Million Bitcoins are mined?
How To Check How Much Youve Mined
Every mining pool will have its user interface. However, the idea is always the same. You need to visit your pools website and type in your wallets public address when prompted.
Type your wallets public address in the search bar. This will let you see all the information about your Bitcoin mining efforts so far. Some pools will let users set how much they want to mine before their Bitcoin is automatically sent to the external wallet address they specified.
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What Is The Number Of Remaining Bitcoins
With a clear impression of the possibility of lost Bitcoins, we can find a clear estimate of the number of remaining Bitcoins. As a matter of fact, you can find out How much Bitcoin is still available? by using a simple calculation. First of all, let us assume the total existing supply of Bitcoin at 18.7 million.
Now, let us remove the total quantity of lost coins in the amount of 1.4 million for the sake of argument. So, you would end up with 17.3 million Bitcoin remaining in circulation now. On the other hand, it is also unreasonable to assume that 17.3 million is a clear answer for the remaining Bitcoins.
You should also note that the quantity of available Bitcoins also depends considerably on the headcount of sellers in comparison to buyers. In the case of bear markets, investors would prefer to sell Bitcoin in bulk. Therefore, bear markets imply higher availability of coins for purchasing. On the other hand, investors hold and purchase Bitcoin in the case of bull markets, thereby reducing the circulating supply.
How Many Bitcoins Does Satoshi Have
Based on the information that can be found in the Genesis Block , it is estimated that Satoshi Nakamoto holds approximately 1.000.000 Bitcoins.
These coins are all derived from blocks which are transactions signed by Satoshi himself and are funds that have never been moved from their wallet since the day they were first mined.
Considering that Bitcoins creator would have access to the coins, he would own more than 5% of the total amount of Bitcoins in existence.
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Is Bitcoin Issuance Similar To Gold
The issuance of Gold has many similarities to that of Bitcoin. The supply of the precious metal has historically increased by around 2% each year.
Similarly, Bitcoins supply will increase at the same pace after the next halving .
Bitcoin, however, has a benefit in this case. While Gold is known to have a limited supply, no one really knows the exact number, or how the issuance will look like in the coming years. With Bitcoin, the opposite is true.
The issuance percentage will keep dropping with each reward halving, which occurs every four years. As time closes the gap between the two assets, it will eventually become obvious that Bitcoin is more scarce and, thus, better to invest in for the long term.
Why Do Bitcoins Need To Be Mined
There is no single answer to this question because bitcoin is a relatively new currency that has yet to be legitimized. Its decentralized nature is precisely the reason why it has to be mined. A system of checks and balances had to be put in place to oversee the release of new bitcoins into circulation.
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The Supply Of Bitcoin Is Limited To 21 Million
In fact, there are only 21 million bitcoins that can be mined in total. Once miners have unlocked this number of bitcoins, the supply will be exhausted. However, it’s possible that bitcoin’s protocol will be changed to allow for a larger supply. What will happen when the global supply of bitcoin reaches its limit? This is the subject of much debate among fans of cryptocurrency.
Currently, around 18.5 million bitcoins have been mined. This leaves less than three million that have yet to be introduced into circulation.
While there can only ever be a maximum of 21 million bitcoins, because people have lost their private keys or have died without leaving their private key instructions to anybody, the actual amount of available bitcoins in circulation could actually be millions less.
How Many Bitcoins Are Mined Each Day
Every 10 minutes, miners verify one block of bitcoin transactions. The current reward for this is 12.5 bitcoins. At this rate, 1,800 bitcoins are released into the market every day. However, approximately every four years, the reward for mining a block of transactions gets cut in half.
This is called a halving event, and last took place in May 2020. This essentially reduced the block reward to 6.25 bitcoins, meaning 900 bitcoins will be mined each day.
The halving events are the reason it will take until the year 2140 for all of them to be mined. When bitcoin mining first started, the block reward was 50 BTC per block, but each bitcoin was only worth pennies.
Once all the bitcoins have been mined, miners will still receive transaction fees as an incentive to keep their equipment running.
What Is The Lightning Network
The lightning network is a second layer technology applied to bitcoin that uses micropayment channels to scale its blockchains capability to conduct transactions more efficiently. Transactions conducted on lightning networks are faster, less costly, and more readily confirmed than those conducted directly on the bitcoin blockchain .
By taking transactions away from the main blockchain and making them off-chain, the lightning network was designed to de-congest the bitcoin blockchain and reduce associated transaction fees. The lightning network can also be used to conduct other types of off-chain transactions involving exchanges between cryptocurrencies.
For example, it is helpful for facilitating atomic swaps that enable one cryptocurrency to be exchanged for another without the involvement of an intermediary, such as cryptocurrency exchanges.
Incentive To Increase Total Bitcoin Supply
Bitcoin mining is popular because theres a huge incentive for miners who can successfully mine the maximum amount of Bitcoin for their own gain. The incentive is paid in block rewards, which is a fixed number of Bitcoins distributed to miners. Besides receiving Bitcoin, miners also receive a part of the transaction fees associated with a block.
When the currency was launched, the reward was 50 Bitcoins for confirming a block of transactions. Now, after three halvings, miners receive 6.25 Bitcoins for confirming a block. Despite the reduction in reward, the higher value of each Bitcoin makes up for the halving effect. Transaction fees have also increased as a result of Bitcoin going mainstream.
There is no doubt that getting block rewards is a major incentive for miners. This monetary incentive not only keeps miners interested in mining, but also helps the entire ecosystem thrive. Under these circumstances, it makes perfect sense to ask what may happen when all of the Bitcoins have been mined.
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How Will Bitcoin Halving Affect Bitcoin Gains
According to the Forbes Finance Council, halving will lead to a revision of bitcoin prices. It noted that two consequences of this event:
- First, miners may quit when the bitcoin reward is split in half.
- Second, they may hold their bitcoins until the price is right to sell.
Halving elicited the same responses from miners in the past, and the council expects something no different from the nearing date.
What Happens When You Mine A Bitcoin
The term mining is just a metaphor, though. Bitcoin mining actually translates to validating transactions. As a miner, it is your task to search for, verify, and validate transactions from a pool of unconfirmed deals before adding them to the bitcoin network. You confirm entries by solving mathematical puzzles, which we will get to in the succeeding sections. In return, the system compensates you with bitcoins.
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Changing Bitcoins Hard Cap
A few Bitcoin critics claim that since Bitcoin is nothing more than software, the rules of the Bitcoin network can be changed easily. These critics believe that as the block subsidythe amount of new bitcoin minted in each blockshrinks every four years, miners, who expend resources to produce new bitcoin, will seek to defend their revenue stream by increasing the supply cap beyond 21 million bitcoin.
Superficially, miners would have an incentive to change the supply cap and grant themselves the ability to print more new bitcoin. However, for several reasons, this change will not occur.
Why There Are No Real Closed Economies
Maintaining a closed economy is difficult in modern society because raw materials, such as crude oil, play a vital role as inputs to final goods. Many countries do not have raw materials naturally and are forced to import these resources. Closed economies are counterintuitive to modern, liberal economic theory, which promotes the opening of domestic markets to international markets to capitalize on comparative advantages and trade.
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Data Shows Nearly 90% Of Bitcoin Has Been Mined Heres How Long It Will Take To Mine The Rest
Bitcoin mining is still one of the hotly debated parts of the blockchain. Miners, no doubt make a good amount for blocks mined given the current price of BTC. But mining difficulty has also gone up as more BTC are mined.
In its decade-long history, over 18.6 million of Bitcoins 21 million total supply has been mined. This constitutes almost 90% of all BTCs supply. This leaves a little over 10% of BTC left to be mined. Currently, there are about 2.250 million coins left to be mined.
At the current rate, it is estimated that the last bitcoin will be mined about 120 years from now. This is due to halving events that will occur every four years, reducing the supply of BTC going into circulation every four years.