How many Bitcoins are there in the world? Big Crypto Bubble? Does mining have a future and is there a risk of losing out on bitcoins?
Price fluctuations during a downturn can be used to advantage by many market participants. Although the cost of BTC today is $10,765, and has not yet been able to gain a foothold above the threshold of 11,000, analysts expect that this promising cryptocurrency will once again surprise everyone.
Current trend
Traders are concerned about the formation of a head and shoulders pattern - a number of parameters indicate that it will not end as optimists think. The cryptocurrency is unable to change the downward trend; there have been minor price fluctuations for several days in a row.
Trading volumes have fallen - most are cautious, expecting developments. Everything indicates that $11,000 has become a strong resistance level. Having reached $11,044, Bitcoin again lost ground.
Analyst Jaini Zidins notes:
Although it is now possible to buy a promising cryptocurrency and then resell it to make a quick profit, this is certainly not the best time to invest in Bitcoin for the long term. We are still facing serious downturns.
Without a serious downturn, there is no hope for a long-term reversal of the trend. The bulls are waiting for a good buying opportunity and hope for changes in the next few days.
Positive forecasts: the future lies with promising technology
Wall Street financier Tom Lee is confident that the situation will return to normal by the beginning of the third quarter. A month ago, he said that a huge rotation of cryptocurrencies was expected this year, and suggested paying attention to promising NEO and Stellar. This week, NEO overtook Cardano in terms of capitalization, taking 6th place in the ranking.
According to the investor, the rate will rise after news about promising projects large companies. The first sign was the announcement of the launch of the Rakutencoin cryptocurrency by the Japanese trading corporation Rakuten:
This is another example of the positive development of crypto technologies in 2018, which demonstrates that the sell-off of Bitcoin and altcoins in January was unjustified.
Lee believes that the realistic price of BTC will be $20,000 by mid-summer, and by the end of the year it should reach $25,000. The investor pointed out another important pattern:
Minimum values are usually fixed in the first two months of the calendar year. Over the past 7 years this has happened 6 times.
Impact on other assets
Over the past 24 hours, the sale of altcoins has continued. Cardano has lost 4.49% and is already worth $0.32. Charles Hoskinson was attacked by Twitter users who purchased the currency at $0.8, considering it promising. After a significant devaluation of investments, they accuse the creators of inaction.
The unsuccessful launch of LitePay slowed the growth of Litecoin; today the cryptocurrency costs $210, although many expected to sell it at a higher price. Expert Charles Hayter takes the fall calmly:
Nothing unexpected, normal volatility. I think everyone is waiting for clarification of the position of the regulators. The problem with Uranium and Venezuelan Petro must somehow be resolved.
The futures market also found itself in the red zone. The bulls are gradually losing ground and prefer to watch from the sidelines.
Tom Lee says the recent declines in Zcash and Ripple indicate that investors should be extremely careful before April:
We believe that in 2018, at least three influential corporations will issue their tokens. Three large companies have already announced their plans; at this rate, businessmen will understand cryptocurrencies sooner than Wall Street.
In addition to Line and Starbucks, which do not hide their interest in this promising direction, Facebook must also decide on a strategy. Every positive news will have a positive impact on prices.
Do you believe in rapid growth Bitcoin? Write about it in the comments.
“When will Bitcoin mining end?” - this question concerns not only those who make money from cryptocurrency mining, but also those who are simply interested in modern technologies and, in particular, digital money. When talking about the end of mining, there are several things to consider possible options and interpretations:
- Software (bitcoin code).
- Social attitude.
- Economic situation.
Let's look at what each of the concepts described above is in more detail.
Software interpretation of the end of Bitcoin mining
Relatively speaking, mining in the form to which we are all accustomed will end when the last 21,000,000th coin is released. This is exactly the emission limit set program code which is embedded in the cryptocurrency. According to experts, this will happen somewhere in the middle of the next century, to be more precise, in 2140.
But this will not be a death sentence for miners, because they will still be able to receive their rewards for transactions. Of course, the bonuses will lose somewhat in volume, but they will also be partially compensated by the system itself.
Social interpretation of the end of Bitcoin mining
Now the interest in Bitcoin on the part of users is quite high, but it is impossible to predict what will happen to the social mood towards cryptocurrency even in the near future. For example, any event or significant failure in the Bitcoin network can turn miners away from it forever.
In addition, it is worth considering the likelihood of more profitable coins appearing on the market, which can negate all the merits and advantages of Bitcoin. This will be especially relevant when the emission of Bitcoin stops and mining bonuses decrease.
An Economic Interpretation of the End of Bitcoin Mining
Speaking about when Bitcoin mining will end, one cannot fail to mention the fact that today the popularity of this cryptocurrency is largely due to economic benefits. Its price is the highest within the digital currency market; accordingly, the profit of miners is also higher in comparison with other tokens.
Again, we come back to the difficulty of forecasting the cryptocurrency market. Bitcoin does not have any material backing, so its price is regulated solely by the interests of users. Therefore, if it ceases to be profitable for miners, they will be forced to switch to other cryptocurrencies.
When will Bitcoin mining end: summary
Summarizing all of the above, we can conclude that Bitcoin mining will continue to exist for quite a long time, at least until 2140. Experts' forecasts regarding the value of cryptocurrency indicate that the likelihood of a sharp drop in the price of the coin is quite low. In the worst case, it will be several thousand dollars and stop growing.
Social interest in Bitcoin is also very stable. Over the 8 years of the coin’s existence, the number of people involved in mining has only grown. And the trend is not slowing down. Accordingly, it is impossible to objectively talk about when Bitcoin mining will end. According to current data, this day will not come soon, but the cryptocurrency environment is changeable - maybe in a month some incredible event will happen that will simply kill production.
At some point, probably around 2140, the last Bitcoin will be mined. What happens next?
As you know, a total of 21 million Bitcoins are available for mining, and when all of them are mined, no new ones will appear. In this way, Bitcoin is fundamentally different from national currencies - their money supply is constantly growing, since the government benefits from inflation. At the same time, it leads to currency devaluation, which means, in practice, individuals and families become poorer.
This is not the case with Bitcoin and, in theory, it should only become more valuable over time as the number of new tokens entering the system is constantly decreasing - and furthermore, the total supply is capped at 21 million.
Approximately every four years, the number of bitcoins that are rewarded for mining the next block is halved: first it was 50 bitcoins, then 25, and then 12.5. In 2020, this will already be 6.25 bitcoins. Thus, if governments are constantly increasing the money supply, the Bitcoin algorithm acts in the opposite way, preventing inflation.
In addition, in different times various amounts in bitcoins became forever unavailable for circulation - to do this, it is enough to throw them away or destroy them old hard disk or flash drive with a wallet. Consequently, the actual pool of coins available for use is even smaller.
Bitcoin mining. Brief overview
Bitcoin mining involves calculating hashes, that is, a computer is used to solve some complex problem. mathematical problem. When it is solved, another block of transactions is created and added to the blockchain.
The blockchain is a public ledger of all Bitcoin transactions, and every new transaction added is recorded in this ledger. By calculating hashes, it is determined which transaction has priority, and if the miners stop doing their thing, the network will stop working.
What will happen when all 21 million bitcoins are received? Will the system stop working because miners will no longer receive rewards for closing blocks? The fact is that miners also receive commissions for processing transactions, and these incomes are not going anywhere.
Bitcoin without mining
At some point, probably around 2140, the last Bitcoin will be mined, but that doesn't mean the network will collapse. In addition to bonuses for computing hashes, miners receive fees for processing transactions. Currently, these fees are small, on the order of a fraction of a percent, but as the reward for settling new blocks decreases, the size of the transaction processing fee is likely to increase - along with the value of Bitcoin.
These fees should be kept at a level that continues to motivate miners, so that even though new bitcoins stop appearing, bitcoin miners will still get paid.
Of course, some will be forced out of the market (this is still happening): as Bitcoin becomes increasingly difficult to mine, miners have to use increasingly efficient equipment to do it. The point is energy consumption - when using insufficiently efficient equipment, the electricity bill may be such that the miner will be at a loss; the mined bitcoins simply will not cover the costs.
The value of Bitcoin should (and will) continue to rise
Transaction processing fees must be quite large, which means the value of Bitcoin must rise - and, fortunately, this mechanism is partly built into Bitcoin.
As we have already said, the supply of traditional currencies is in practice unlimited, and governments at their own discretion increase the money supply, while the value of each individual monetary unit, for example, the dollar, decreases.
Imagine that the money supply is a giant pizza, and by increasing the money supply you are not making the pizza bigger, but rather cutting it into smaller and smaller pieces. As the government increases the money supply (i.e., slices the pizza smaller), the value of money (slice size) decreases.
Increasing money supply encourages investment because companies and people have to spend money before it gets too cheap, so the government often deliberately makes us poorer.
In the case of Bitcoin, the money supply will grow until 2140, however, since this is a previously described and therefore predictable process, it does not lead to the negative consequences described above.
In July 2016, the premium for hash calculations was reduced from 25 to 12.5 bitcoins. In anticipation of this event, the price of Bitcoin increased significantly, from approximately $450 to $750. The price increase stopped when the premium decreased, so it can be assumed that when the supply of new Bitcoins halves again - likely in July 2020 - the price of the cryptocurrency will rise again. The same thing should happen in another four years.
Bitcoin in the (distant) future
As the value of Bitcoin rises, so will the rewards for processing transactions. However, for this increase to be enough when mining stops, the price of Bitcoin would have to increase significantly, and the assumption that Bitcoin could cost $50,000 or $100,000 does not seem crazy.
Like any other currency, Bitcoin can be split into smaller units, and the smallest of them is called Satoshi. You may remember that once a cent, a penny or a kopeck was a fairly large amount, but now, due to inflation, they have become much cheaper.
In the case of Bitcoin, the opposite scenario is possible - the Satoshi may become the trading unit, and Bitcoin will be used only for large payments. Today, a commission of 10 thousand satoshi does not sound very tempting, but in the future this may change.
Prepared by Taya Aryanova
Today it is difficult to find a person who does not know what mining is and how profitable it is. This is partly true. But, as you know, no type of income, especially a “super-profitable” one, can generate income indefinitely. And it arises logical question– when will mining end?
With the growing popularity of cryptocurrencies, the popularity of a new method of earning money has also grown - the so-called “mining”. There are legends that it brought fabulous profits to many enthusiasts who stood at the origins of this new industry. And today it is difficult to find a person who has not heard about mining. However, today the prospects for mining as a means of earning money are not nearly as bright as, for example, a year ago. And there are reasons for this. Let's try to imagine the prospects for this type of business.
What is mining and why is it needed?
To understand the future of mining, you need to understand its essence. The first question that arises when assessing the profitability of mining is what do they pay for? Many people think that “mining” cryptocurrency is akin to mining gold, silver or platinum. But that's not true. There is a code that allows you to receive cryptocurrency for some activity (to be precise - mathematical calculations). And if the code allows you to get a new token, then it’s built into the code.
At its technical essence, mining is the process of maintaining the functionality of the blockchain of a particular cryptocurrency. As is known, distributed network needs a certain number of “links” to ensure its operation. For activities to ensure the operability of the network, the owners of “links”, or “nodes” as they are also called, receive a reward. Essentially, they select a key for a block that stores information about a transaction in a particular cryptocurrency. The presence of such blocks ensures that information is stored and transactions are authenticated.
Thus, mining is necessary for the existence of almost any blockchain.
Mining and market
As with any paid activity, the cost of mining depends on the demand for it and its supply. And here the usual market mechanisms, described back in the 18th and 19th centuries, operate. The fact is that if there are too many miners, more than are needed for the network to operate, blocks and, accordingly, new “coins” are formed too quickly. Firstly, it leads to inflation. Secondly, there is nothing to store in the new blocks - there is not enough information about transactions on the network for everyone.
To regulate this process, a tool called “network complexity” was created. It lies in the fact that when the total computing power of all miners is too large, when blocks are mined too often, the complexity of the network is recalculated and it becomes more difficult to mine new blocks. As a result, the emergence of a new block and, accordingly, the payment of remuneration for its formation occurs with the frequency inherent in the concept of the network. For example, in Bitcoin it is 10 minutes.
In addition, as the number of mined blocks increases, the reward for each newly mined block decreases. Thus, two processes take place:
- It becomes more difficult to mine blocks - each individual miner or farm receives rewards less and less often;
- The reward becomes smaller - with each new block mined, the miner receives less money.
As a result, mining profitability decreases. Needs to be emphasized. That a couple of years ago, when the complexity of networks was low, mining brought significant income. But today it is too late to start individual mining, since the complexity of all more or less known cryptocurrency networks is very high.
Mining industry
With the growing popularity of mining, a whole industry has emerged for this type of activity. And if earlier video card manufacturers only slightly upgraded the chips to make them more suitable for mining, then in the last few years ready-made devices designed exclusively for cryptocurrency mining have been sold.
And again, demand creates supply. When the income from mining on “old hardware” falls, manufacturers offer a new device that allows for much more calculations per second. BUT. If cryptocurrency rates do not grow, profitability will still fall, as the network has again become more complex. And economically, mining turns out to be unprofitable.
More about farms
In addition to the fact that cryptocurrency mining brings in less and less money on one specific device, its cost increases, i.e. costs associated with production. Let's not forget that just purchasing a device is not enough. Equipment needs to be serviced. This includes energy supply and ventilation, and cleaning of the same coolers.
When it comes to mining attempts on one home PC, such problems are almost invisible. But the income from such activities today is also close to zero. To overcome the problem of increasing complexity, mining equipment is combined into so-called farms or pools. Due to the operation of appropriate protocols and parallel computing the effect from the operation of the farm is much higher than from the separate operation of all the devices included in it. But maintenance also becomes much more difficult. It is necessary to select a room (the noise from many devices is quite noticeable) and provide power.
Today there are farms that consume 40, 60 and even 80 MW. This amount of energy requires corresponding costs. It is necessary to ensure ventilation of the entire room, and this also costs and maintains the ventilation system itself. As a result, all these costs (costs) reduce the profitability of the farm.
When creating pools, devices located in different geographical locations are combined. They can be computers belonging to different owners. At the same time, when united in a pool, they are able to perform sufficiently complex calculations to compete in the market.
IN lately The offer to rent equipment from an existing pool has become popular (). Anyone can deposit a small amount into the account and participate in the distribution of income. No problems with purchasing equipment and its maintenance, maintenance, etc. The question arises as to why pool owners need this. Precisely in order to reduce your risks associated with the complication of the network and a drop in profits. Unfortunately, the amounts paid to the “investors” allow the investment to be repaid only after many months - longer than it would previously have taken to pay off the farm.
Is it worth starting
Despite the fact that calculations show a decline in the profitability of mining, there is now a lot of noise around it and many people are trying to start doing it. However, isn't it too late? As calculations show, even the most powerful miners (the so-called ASIC miners) available in public stores and message boards will pay for themselves no sooner than in a year or two, even at the current level of network complexity. And we are not talking about Bitcoin or Ethereum.
For example, the same Dash. It is enough to look at the complexity of the network, as well as the power and cost of modern ASICs, to understand that mining is unprofitable. After all, with the entry of powerful equipment into the market and its widespread use, the complexity of the network naturally increases. As a result, equipment owners are forced to “jump” from one cryptocurrency to another, changing protocols, programs, and reflashing equipment in order to make at least some profit. But there is no longer enough market for everyone. , if you do not have access to the latest ASICs at manufacturer prices.
Forecast
Does all this mean the end of mining? If we talk about mining as a means of earning money for anyone, then apparently yes. It’s too late to invest in mining now. The market has received enough links and pools to ensure the functionality of any blockchain. However, this does not mean that the mining industry will collapse. Today the reverse process is also observed. Entire pools are being shut down from networks. This may be due to the fact that mining has become unprofitable with existing equipment. As a result, the complexity of the network drops slightly and this gives hope for at least some profit. But, alas, you can’t count on astronomical figures.
In cryptocurrency mining, as in any other major undertaking, the profits were made by those who “were at the origins.” Many of them did not even count on such income, but rather went into business out of enthusiasm. Who could have known 3 years ago that Bitcoin would rise in price by 70 – 700 – 1000 times. But rate growth is one of the main components of profit when working with cryptocurrency. Now, when there are too many people who want to “earn money”, there is not enough profit for everyone. This is the law of the market.
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The recent rise in Bitcoin prices has been accompanied by a boom in “sensationalist” journalism highlighting its high energy consumption. Peter Van Valkenburg, head of the research group at the non-profit organization Coin Center (Washington), debunks five myths about Bitcoin energy consumption that readers may have encountered on the Internet or in newspapers.
Myth 1: Miners waste a lot of electricity performing useless calculations
People who don't understand the fundamental computer technology, which underlies Bitcoin, suggests that the only activity of miners is to burn electricity in order to enrich themselves with new bitcoins. These critics are misguided, but understandably so, since the term “mining” itself is somewhat misleading. Open the Bitcoin white paper, released in 2008. In its pages you won't find the term "miners" in reference to the people we call miners these days. The only way mining is mentioned in the document is that there is a parallel with gold mining; in general, the author of the white paper calls participants in the Bitcoin network nodes. The term "miner" first surfaced in 2010 on the Internet forum BitcoinTalk, and for some time the word "minting" was used along with mining. When technologies do not have unified corporations or investors improving and promoting them, the terms that describe them arise organically from the depths of the user community. Mining is a misleading term because it hides the facts. Miners, that is, miners or gold miners, dig huge holes in the ground at considerable expense to find and extract marketable metals, minerals and precious/semi-precious stones. By extracting these values, they burn resources. Sure, Bitcoin miners do something similar, but they also use fundamentally innovative technology to validate the data in computer network, which implements the open consensus mechanism.
We can give a comprehensive explanation of the mining mechanism, but it’s better to talk a little about open consensus. It is undeniably useful and could not be implemented in the past. Bitcoin is not only an asset, but also a network of computers connected on the Internet that jointly keep records of all transactions. The user joins the network using a free software through a device with Internet access. The computer then allows him to send bitcoin payments to other computers and receive funds from other network participants. The computer also helps store and update an ever-growing list of all transactions, called the blockchain. People trust Bitcoin as a store of value and a means of payment largely because they can see this blockchain and all transactions throughout its history (including their own).
Now let's return to the above-mentioned open consensus mechanism. In this context, consensus simply means agreement; we're just trying to get a group of computers to agree. Mechanisms for creating consensus among multiple computers have existed since the 1980s. These legacy mechanisms allow, for example, six IBM-owned data centers to synchronously store and update company-critical backup data. The Bitcoin network also stores data (transactions) in a cluster of machines, and these devices must maintain consensus. The innovation of the fundamental blockchain technology is the open consensus mechanism. In our example with the group IBM computers only a set number of computers (that is, six data centers) can participate in the process at the same time, and only computers authorized by IBM can join the work (this is a kind of intranet). Bitcoin's consensus mechanism allows countless computers to participate, and anyone can join (which is to a greater extent reminds me of the Internet). This is what is meant by an open consensus mechanism. This is why people say that Bitcoin is “decentralized”, and why it would be appropriate to call Bitcoin a digital p2p currency in comparison to centralized digital money created by companies like PayPal or Venmo, which decide who has the right to add new payment data and add it themselves their. In old closed consensus mechanisms, participants take turns adding new data, and all of it can be identified (and known in advance). If the number of participants is infinite, then how can you make them alternate and how can you know that they are not cheating? This is where Bitcoin mining comes into the picture. What are the characteristics of mining?
- Miners are selected randomly, based on a lottery principle.
- A winner is selected every ten minutes by an algorithm.
- To be selected, it is necessary to carry out expensive and verifiable computational work (“lottery tickets” cost a lot of money).
- Miners attempting to enter invalid transactions into the blockchain cannot be selected.
This mechanism makes fraud ineffective because miners pay a high price to even qualify for the lottery and lose their status if they attempt to submit invalid transactions. The lottery always remains fair because the price of “tickets” increases as everyone buys them more people. In other words, miners are forced to compete. Thus, if many people want to spend computing power to join the consensus, then the price of participation increases along with the increase in the complexity of the required computational work. More computing means more electricity required. Accordingly, Bitcoin's energy consumption is growing.
Somewhere this system can be considered as a Rube Goldberg "machine" ( American cartoonist and sculptor, known for cartoons in which fictitious complex equipment performs primitive and unnecessary operations - approx. edit.). If you look at it this way, then you have begun to understand what Bitcoin is! This is a truly complex mechanism, but currently the only one that allows a large number of unidentified computers to agree on shared data. Thus, this is the only way to electronic p2p money. Energy consumption in in this case Anything but useless, since the energy goes to protecting transaction data worth hundreds of billions of dollars. Unlike the energy used by the “miner” of gold, here electricity is used to provide “gold” to the general public: there is network infrastructure p2p payments, accessible to any inhabitant of the planet with a smartphone and Internet access.
Myth 2: Energy consumption will increase as the number of transactions increases; if Bitcoin ever scales to global levels, the oceans will boil
This is fundamentally wrong. We have already found out that mining energy costs increase in proportion to the intensity of competition among miners, and not to the number of confirmed transactions. Confirmation via digital signature Requires a small amount of computing power. Not the best new laptop is able to verify a signature in milliseconds, and it is hardly possible to find this work reflected in the electricity bill.
Why is there such enormous competition and the associated costs? The reasons are purely economic. Now the price of Bitcoin is high, and every 10 minutes one miner receives 12 and a half new radiant coins. This is healthy competition because it assumes that the effort to maintain the network scales automatically as the value of the transaction data on the blockchain increases. Thus, the more value moves on the network (its increase is caused by individuals estimating the value higher than the price reflects), the more resources are invested in storing data.
It is noteworthy how different this scheme is from the data protection of, say, the American credit history bureau Equifax or any other company that works with a huge amount of data. There, the effort spent on storing information is scaled in accordance with management's assessment of risks and threats.
One last note about competition between miners. Over time it may weaken. Every four years, the reward in the form of new coins is halved, and this will continue until the supply of bitcoins runs out. Miners will continue to operate as they can also collect transaction fees, but the total payment volume received by the winning miner will likely be less than it is today, even if the price of Bitcoin continues to rise. Smaller rewards will mean that the amount of computing power invested in achieving success will be reduced and the level of energy expenditure will be reduced.
Myth 3: Credit card transactions are much cheaper and less energy intensive than Bitcoin transactions
It's a comparison of apples and oranges. Transaction by credit card is not a full, complete translation. This is just an authorization for payment, the beginning of an intricate “dance” in which at least five parties participate (the card owner, the card issuing bank, the card network, the acquiring bank and the payee). Eventually (after days or even weeks) the authorized payment will pass through this entire network of players. The process ends when the user pays for the credit card transaction, and it definitely does not happen instantly, with one click.
In contrast, a Bitcoin transaction can be considered completed the moment it enters the blockchain. And on its way it does not pass through cumbersome institutions similar to those mentioned above. It is true that a miner who places a transaction in a block spends a certain amount of electricity. But it is significantly less than the amount of electricity required to fully operate at least three large financial companies, which have to work for several days to process your credit card transactions.
Myth 4: Bitcoin miners pollute the environment and will continue to do so.
There is nothing wrong with using energy in itself. Greenhouse gases are bad, but it is not a fact that Bitcoin will lead to an increase in their emissions in the foreseeable future. By the way, if mining suddenly becomes the main driving force of energy consumption on the planet, then it will be good for the environment! Just like the revolution in consumer electronics powered by massive computing power (a phenomenon described by Moore's Law), the Bitcoin revolution could catalyze a similar boom in innovative clean energy technologies.
Aluminum production accounts for approximately 3% of global energy supply, but we don't see the media sounding the alarm about laptop cases the way they do about Bitcoin. Aluminum production is not often seen as a problem because heavy industry contributes to efficient work sector of the electricity sector. Why? Because heavy industry is a large consumer that is always looking for the cheapest source of electricity. Heavy industry can, in theory, be based anywhere, and electricity charges typically form a significant percentage of its total costs. Electricity costs account for 40-45% of the chemical industry's (eg chlorine) costs and 30-50% of the steel and aluminum industry's costs. Accordingly, heavy industry (again in theory) will be based where electricity prices are lower.
Typically, demand stimulates supply and rewards those who develop more cheap options electricity production. Recently, this has been the so-called renewable (“green”) energy: solar and wind energy are the cheapest, with geothermal and hydropower not far behind.
However, for the typical heavy industrial owner, electricity prices will not always be a top concern. He may well turn to expensive, dirty energy when it comes to profit. In addition, enterprises prefer to be based in countries where their customers are located, where other costs are lower, and governments subsidize them in an effort to stimulate production growth.
Electricity prices are more important to miners than to typical heavy industry workers. Electricity bills can account for 30-70% of the costs of cryptocurrency miners. But miners do not have to think about the location of their clients and solve logistics problems. Digital by nature, bitcoins have only two factors of production - electricity and hardware, and are much easier to “deliver” them around the world than, for example, steel. One miner moved his farm across the United States to the northwest of the country because of cheap hydroelectric power available there. According to him, “it was worth it.” For the same reason, miners choose Iceland or other countries with excess electrical power. The land of volcanoes and waterfalls not only offers beautiful views, but also an abundance of geothermal and hydraulic energy. If mining does begin to consume large amounts of electricity on a global scale, it will trigger a green energy revolution. Moore's Law was primarily concerned with the incredible progress in materials science, but it also took into account the unprecedented demand for computing power that fueled this progress and made it possible to make the study and development of semiconductors a profitable endeavor. If we want to see a similar revolution in energy, we should be rooting for Bitcoin. The facts are that the Bitcoin network now provides a $200,000 reward every 10 minutes to the person who can find the cheapest energy on the planet, which may also be the most environmentally friendly. The time spent searching is worth it.
Myth 5. Mining efficiency will decrease over time
We already know that energy consumption will not increase in parallel with the increase in the number of Bitcoin transactions. Energy consumption may remain stable or even decrease despite the rapid increase in their number. The Bitcoin community is now trying to create second-layer networks or new open consensus mechanisms that will allow thousands and even millions of transactions per second.
There are different approaches to solving the scaling problem. Lightning Network and similar payment channel infrastructures aim to make batch payments for multiple transactions by recording only two transactions on the blockchain itself, and provide automated controls that eliminate the need to rely on the integrity of the person making the batch payment. Other developers are experimenting with new open consensus mechanisms that have the potential to scale significantly while reducing energy costs. Don't forget that Bitcoin's consensus mechanism contains a built-in lottery in which miners compete for a prize. It is also worth remembering that the price of each “lottery ticket” is determined through verifiable calculations. These calculations are called proof-of-work, which is why Bitcoin's consensus mechanism is often called PoW. Ethereum developers, in turn, are now experimenting with a proof-of-stake consensus mechanism called Casper. In this scheme of work, miners (or validators) still compete for a prize in the lottery, but this time they prove that they own a certain amount of cryptocurrency (or its share) in the blockchain. It may be more appropriate to call them shareholders rather than miners, but who knows what name will stick and whether proof of stake will be as reliable and effective as proof of work.
The only thing to be sure of is that there is no shortage of innovative thinking in the digital currency space, which means the cryptocurrency revolution may turn out to be much greener than we think.