The Cryptoverse has been holding breath this week waiting for the 18 millionth bitcoin (BTC) to be mined today, while the #3MillionLeft. How many unmined bitcoins are left? There are currently close to 1,, Bitcoins left that aren't in circulation yet. With only 21 million. Unmined gold stays where it is, under the ground, or in an asteroid, etc. However, with Bitcoin, the act of mining brings the Bitcoin into existence. ONLINE BETTING HORSE RACING AUSTRALIA A
Jing has several hardware mining rigs with application-specific integrated circuits, where hundreds of thousands of integrated circuits run the SHA algorithm in parallel at incredible speeds. These specialized machines are connected to his mining node over USB. Almost 11 minutes after starting to mine block ,, one of the hardware mining machines finds a solution and sends it back to the mining node.
They receive, validate, and then propagate the new block. As the block ripples out across the network, each node adds it to its own copy of the blockchain, extending it to a new height of , blocks. As mining nodes receive and validate the block, they abandon their efforts to find a block at the same height and immediately start computing the next block in the chain.
As the newly solved block moves across the network, each node performs a series of tests to validate it before propagating it to its peers. This ensures that only valid blocks are propagated on the network. The independent validation also ensures that miners who act honestly get their blocks incorporated in the blockchain, thus earning the reward. Those miners who act dishonestly have their blocks rejected and not only lose the reward, but also waste the effort expended to find a proof-of-work solution, thus incurring the cost of electricity without compensation.
When a node receives a new block, it will validate the block by checking it against a long list of criteria that must all be met; otherwise, the block is rejected. In previous sections we saw how the miners get to write a transaction that awards them the new bitcoins created within the block and claim the transaction fees.
Because every node validates blocks according to the same rules. An invalid coinbase transaction would make the entire block invalid, which would result in the block being rejected and, therefore, that transaction would never become part of the ledger. The miners have to construct a perfect block, based on the shared rules that all nodes follow, and mine it with a correct solution to the proof of work.
To do so, they expend a lot of electricity in mining, and if they cheat, all the electricity and effort is wasted. This is why independent validation is a key component of decentralized consensus. Once a node has validated a new block, it will then attempt to assemble a chain by connecting the block to the existing blockchain.
Nodes maintain three sets of blocks: those connected to the main blockchain, those that form branches off the main blockchain secondary chains , and finally, blocks that do not have a known parent in the known chains orphans. Invalid blocks are rejected as soon as any one of the validation criteria fails and are therefore not included in any chain. Under most circumstances this is also the chain with the most blocks in it, unless there are two equal-length chains and one has more proof of work.
These blocks are valid but not part of the main chain. They are kept for future reference, in case one of those chains is extended to exceed the main chain in difficulty. In the next section Blockchain Forks , we will see how secondary chains occur as a result of an almost simultaneous mining of blocks at the same height.
When a new block is received, a node will try to slot it into the existing blockchain. Then, the node will attempt to find that parent in the existing blockchain. For example, the new block , has a reference to the hash of its parent block , Most nodes that receive , will already have block , as the tip of their main chain and will therefore link the new block and extend that chain.
Sometimes, as we will see in Blockchain Forks , the new block extends a chain that is not the main chain. In that case, the node will attach the new block to the secondary chain it extends and then compare the difficulty of the secondary chain to the main chain. If the secondary chain has more cumulative difficulty than the main chain, the node will reconverge on the secondary chain, meaning it will select the secondary chain as its new main chain, making the old main chain a secondary chain.
If the node is a miner, it will now construct a block extending this new, longer, chain. Once the parent is received and linked into the existing chains, the orphan can be pulled out of the orphan pool and linked to the parent, making it part of a chain. Orphan blocks usually occur when two blocks that were mined within a short time of each other are received in reverse order child before parent. By selecting the greatest-difficulty chain, all nodes eventually achieve network-wide consensus.
Temporary discrepancies between chains are resolved eventually as more proof of work is added, extending one of the possible chains. When they mine a new block and extend the chain, the new block itself represents their vote.
In the next section we will look at how discrepancies between competing chains forks are resolved by the independent selection of the longest difficulty chain. Blockchain Forks Because the blockchain is a decentralized data structure, different copies of it are not always consistent. Blocks might arrive at different nodes at different times, causing the nodes to have different perspectives of the blockchain.
To resolve this, each node always selects and attempts to extend the chain of blocks that represents the most proof of work, also known as the longest chain or greatest cumulative difficulty chain. By summing the difficulty recorded in each block in a chain, a node can calculate the total amount of proof of work that has been expended to create that chain.
As long as all nodes select the longest cumulative difficulty chain, the global bitcoin network eventually converges to a consistent state. Forks occur as temporary inconsistencies between versions of the blockchain, which are resolved by eventual reconvergence as more blocks are added to one of the forks. The diagram is a simplified representation of bitcoin as a global network. Rather, it forms a mesh network of interconnected nodes, which might be located very far from each other geographically.
The representation of a geographic topology is a simplification used for the purposes of illustrating a fork. For illustration purposes, different blocks are shown as different colors, spreading across the network and coloring the connections they traverse. In the first diagram Figure , the network has a unified perspective of the blockchain, with the blue block as the tip of the main chain. Figure This occurs under normal conditions whenever two miners solve the proof-of-work algorithm within a short period of time from each other.
Each node that receives a valid block will incorporate it into its blockchain, extending the blockchain by one block. If that node later sees another candidate block extending the same parent, it connects the second candidate on a secondary chain. In Figure , we see two miners who mine two different blocks almost simultaneously.
Both of these blocks are children of the blue block, meant to extend the chain by building on top of the blue block. To help us track it, one is visualized as a red block originating from Canada, and the other is marked as a green block originating from Australia. Both blocks are valid, both blocks contain a valid solution to the proof of work, and both blocks extend the same parent.
Both blocks likely contain most of the same transactions, with only perhaps a few differences in the order of transactions. As shown in Figure , the network splits into two different perspectives of the blockchain, one side topped with a red block, the other with a green block. Forks are almost always resolved within one block. They immediately propagate this new block and the entire network sees it as a valid solution as shown in Figure The chain blue-green-pink is now longer more cumulative difficulty than the chain blue-red.
As a result, those nodes will set the chain blue-green-pink as main chain and change the blue-red chain to being a secondary chain, as shown in Figure This is a chain reconvergence, because those nodes are forced to revise their view of the blockchain to incorporate the new evidence of a longer chain. However, the chance of that happening is very low. Whereas a one-block fork might occur every week, a two-block fork is exceedingly rare.
A faster block time would make transactions clear faster but lead to more frequent blockchain forks, whereas a slower block time would decrease the number of forks but make settlement slower. Mining and the Hashing Race Bitcoin mining is an extremely competitive industry. Some years the growth has reflected a complete change of technology, such as in and when many miners switched from using CPU mining to GPU mining and field programmable gate array FPGA mining.
In the introduction of ASIC mining lead to another giant leap in mining power, by placing the SHA function directly on silicon chips specialized for the purpose of mining. The first such chips could deliver more mining power in a single box than the entire bitcoin network in The following list shows the total hashing power of the bitcoin network, over the first five years of operation: 0.
As you can see, the competition between miners and the growth of bitcoin has resulted in an exponential increase in the hashing power total hashes per second across the network. Total hashing power, gigahashes per second, over two years As the amount of hashing power applied to mining bitcoin has exploded, the difficulty has risen to match it. The difficulty metric in the chart shown in Figure is measured as a ratio of current difficulty over minimum difficulty the difficulty of the first block.
Currently, ASIC manufacturers are aiming to overtake general-purpose CPU chip manufacturers, designing chips with a feature size of 16nm, because the profitability of mining is driving this industry even faster than general computing. Still, the mining power of the network continues to advance at an exponential pace as the race for higher density chips is matched with a race for higher density data centers where thousands of these chips can be deployed.
The Extra Nonce Solution Since , bitcoin mining has evolved to resolve a fundamental limitation in the structure of the block header. In the early days of bitcoin, a miner could find a block by iterating through the nonce until the resulting hash was below the target. As difficulty increased, miners often cycled through all 4 billion values of the nonce without finding a block. However, this was easily resolved by updating the block timestamp to account for the elapsed time.
Because the timestamp is part of the header, the change would allow miners to iterate through the values of the nonce again with different results. The timestamp could be stretched a bit, but moving it too far into the future would cause the block to become invalid. The solution was to use the coinbase transaction as a source of extra nonce values.
Because the coinbase script can store between 2 and bytes of data, miners started using that space as extra nonce space, allowing them to explore a much larger range of block header values to find valid blocks. The coinbase transaction is included in the merkle tree, which means that any change in the coinbase script causes the merkle root to change.
If, in the future, miners could run through all these possibilities, they could then modify the timestamp. There is also more space in the coinbase script for future expansion of the extra nonce space. The likelihood of them finding a block to offset their electricity and hardware costs is so low that it represents a gamble, like playing the lottery.
Even the fastest consumer ASIC mining system cannot keep up with commercial systems that stack tens of thousands of these chips in giant warehouses near hydro-electric power stations. Miners now collaborate to form mining pools, pooling their hashing power and sharing the reward among thousands of participants. By participating in a pool, miners get a smaller share of the overall reward, but typically get rewarded every day, reducing uncertainty. At current bitcoin difficulty, the miner will be able to solo mine a block approximately once every days, or every 5 months.
He might find two blocks in five months and make a very large profit. Or he might not find a block for 10 months and suffer a financial loss. Even worse, the difficulty of the bitcoin proof-of-work algorithm is likely to go up significantly over that period, at the current rate of growth of hashing power, meaning the miner has, at most, six months to break even before the hardware is effectively obsolete and must be replaced by more powerful mining hardware.
The regular payouts from a mining pool will help him amortize the cost of hardware and electricity over time without taking an enormous risk. The hardware will still be obsolete in six to nine months and the risk is still high, but the revenue is at least regular and reliable over that period.
Mining pools coordinate many hundreds or thousands of miners, over specialized pool-mining protocols. The individual miners configure their mining equipment to connect to a pool server, after creating an account with the pool. Their mining hardware remains connected to the pool server while mining, synchronizing their efforts with the other miners. Thus, the pool miners share the effort to mine a block and then share in the rewards.
Successful blocks pay the reward to a pool bitcoin address, rather than individual miners. Typically, the pool server charges a percentage fee of the rewards for providing the pool-mining service. When someone in the pool successfully mines a block, the reward is earned by the pool and then shared with all miners in proportion to the number of shares they contributed to the effort.
Pools are open to any miner, big or small, professional or amateur. A pool will therefore have some participants with a single small mining machine, and others with a garage full of high-end mining hardware. Some will be mining with a few tens of a kilowatt of electricity, others will be running a data center consuming a megawatt of power. How does a mining pool measure the individual contributions, so as to fairly distribute the rewards, without the possibility of cheating?
By setting a lower difficulty for earning shares, the pool measures the amount of work done by each miner. Each time a pool miner finds a block header hash that is less than the pool difficulty, she proves she has done the hashing work to find that result.
Thousands of miners trying to find low-value hashes will eventually find one low enough to satisfy the bitcoin network target. If the dice players are throwing dice with a goal of throwing less than four the overall network difficulty , a pool would set an easier target, counting how many times the pool players managed to throw less than eight. Every now and then, one of the pool players will throw a combined dice throw of less than four and the pool wins.
Then, the earnings can be distributed to the pool players based on the shares they earned. Similarly, a mining pool will set a pool difficulty that will ensure that an individual pool miner can find block header hashes that are less than the pool difficulty quite often, earning shares. Every now and then, one of these attempts will produce a block header hash that is less than the bitcoin network target, making it a valid block and the whole pool wins. The owner of the pool server is called the pool operator, and he charges pool miners a percentage fee of the earnings.
The pool server runs specialized software and a pool-mining protocol that coordinates the activities of the pool miners. The pool server is also connected to one or more full bitcoin nodes and has direct access to a full copy of the blockchain database.
This allows the pool server to validate blocks and transactions on behalf of the pool miners, relieving them of the burden of running a full node. For pool miners, this is an important consideration, because a full node requires a dedicated computer with at least 15 to 20 GB of persistent storage disk and at least 2 GB of memory RAM. Furthermore, the bitcoin software running on the full node needs to be monitored, maintained, and upgraded frequently.
For many miners, the ability to mine without running a full node is another big benefit of joining a managed pool. The pool server constructs a candidate block by aggregating transactions, adding a coinbase transaction with extra nonce space , calculating the merkle root, and linking to the previous block hash. The header of the candidate block is then sent to each of the pool miners as a template. Each pool miner then mines using the block template, at a lower difficulty than the bitcoin network difficulty, and sends any successful results back to the pool server to earn shares.
P2Pool Managed pools create the possibility of cheating by the pool operator, who might direct the pool effort to double-spend transactions or invalidate blocks see Consensus Attacks. Furthermore, centralized pool servers represent a single-point-of-failure.
If the pool server is down or is slowed by a denial-of-service attack, the pool miners cannot mine. In , to resolve these issues of centralization, a new pool mining method was proposed and implemented: P2Pool is a peer-to-peer mining pool, without a central operator. P2Pool works by decentralizing the functions of the pool server, implementing a parallel blockchain-like system called a share chain.
A share chain is a blockchain running at a lower difficulty than the bitcoin blockchain. The share chain allows pool miners to collaborate in a decentralized pool, by mining shares on the share chain at a rate of one share block every 30 seconds. When the Bitcoin supply reaches its upper limit, no additional bitcoins will be generated. Bitcoin miners will likely earn income only from transaction fees. The total number of bitcoins issued is not expected to reach 21 million.
That's because the Bitcoin network uses bit-shift operators—arithmetic operators that round some decimal points down to the closest smallest integer. This rounding down may occur when the block reward for producing a new Bitcoin block is divided in half, and the amount of the new reward is calculated. That reward can be expressed in satoshis , with one satoshi equaling 0.
Because a satoshi is the smallest unit of measurement in the Bitcoin network, it cannot be split in half. The Bitcoin blockchain, when tasked with splitting a satoshi in half to calculate a new reward amount, is programmed—using bit-shift operators—to round down to the nearest whole integer. This systematic rounding down of Bitcoin block rewards, in fractions of satoshis, is why the total number of bitcoins issued is likely to fall slightly short of 21 million.
As of January , With the number of new bitcoins issued per block decreasing by half approximately every four years, the final bitcoin is not expected to be generated until the year The number of new bitcoins minted per block was 50 when Bitcoin was first established, and has since decreased to 6. Bitcoin rewards are halved about every four years.
Investopedia Although a maximum of 21 million bitcoins can be minted, it's likely that the number of bitcoins circulating remains substantially below that number. Bitcoin holders can lose access to their bitcoins, such as by losing the private keys to their Bitcoin wallets or passing away without sharing their wallet details. After the maximum number of bitcoins is reached, even if that number is ultimately slightly below 21 million, no new bitcoins will be issued.
Bitcoin transactions will continue to be pooled into blocks and processed, and Bitcoin miners will continue to be rewarded, but likely only with transaction processing fees. Bitcoin reaching its upper supply limit is likely to affect Bitcoin miners, but how they are affected depends in part on how Bitcoin evolves as a cryptocurrency.
If the Bitcoin blockchain in processes many transactions, then Bitcoin miners may still be able to generate profits from only transaction processing fees. If Bitcoin in largely serves as a store of value , rather than for daily purchases, then it's still possible for miners to profit—even with low transaction volumes and the disappearance of block rewards.
Miners can charge high transaction fees to process high-value transactions or large batches of transactions, with more efficient "layer 2" blockchains like the Lightning Network working in conjunction with the Bitcoin blockchain to facilitate daily bitcoin spending.
But if Bitcoin mining in the absence of block rewards ceases to be reliably profitable, then some negative outcomes can occur: Miners form cartels: Groups of miners may collude in an attempt to control mining resources and command higher transaction fees. Selfish mining occurs: Miners engaging in selfish mining collude to hide new valid blocks and later release them as orphan blocks that are not confirmed by the Bitcoin network.
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