08/14/2023 0 Comments

1. Hash Power Commitment to Core Network

The Core network is witnessing a notable surge in hash power commitment. As of now, it holds 40% of Bitcoin’s overall hash power. This achievement highlights not just the increasing relevance of the Core network but also the evolving nature of Bitcoin miner dynamics.

The Essence of Proof of Work

The fundamental concept of Proof of Work requires miners to convert energy into digital currency. The entire framework is designed in a manner that promotes collaborative competition among miners. This not only fortifies the network but also ensures that miners receive Bitcoin as their reward.

With a staggering estimate of 1 million miners globally, this competitive system ensures the prevention of potential threats like the 51% attack on the network. Such a decentralized approach sits at the core of Bitcoin’s unparalleled security by ensuring there’s no single point susceptible to failure.

Mining: Boons and Hurdles

The fluctuating price of Bitcoin has recently piqued interest again, which has spelled good news for miners. The introduction and popularity of Ordinals and BRC-20 tokens have further spurred a rise in transaction fees, thereby elevating miner revenue.

Although these fresh revenue avenues have significantly bolstered the security apparatus of the Bitcoin network, their sustainability is questionable. For instance, Ordinals NFTs and BRC-20 coins could potentially undergo volatile shifts, driven by market dynamics.

Before this renewed enthusiasm, miners grappled with challenges like unpredictable price movements, cutthroat competition for computational prowess, and escalating interest rates. Such challenges might rear their heads again, emphasizing the need for miners to have diverse revenue avenues.

Symbiotic Ties: Core and Bitcoin

Miners hold the key to offering a unique paradigm termed “Decentralization as a Service.” Such a service can be a boon to platforms like Core and others that intend to harness Bitcoin’s governance framework without the restrictions inherent in direct protocol development. Specifically, for Core, miners can seamlessly extend Bitcoin’s governance to the platform, ensuring Bitcoin’s functionality remains uncompromised.

The increasing hash power shift to Core stands testament to its growing appeal for Bitcoin miners in pursuit of diversified income streams. Unlike Ordinals and BRC-20 that directly impact Bitcoin mining, Core offers an alternative without impinging on the Bitcoin network. This delegation of hash power to Core ensures the Bitcoin user experience remains unhindered.

In summary, Core’s alliance with Bitcoin epitomizes mutualism, leading to a more robust mining ecosystem and overarching governance. As the trend of mining pools directing hash power to Core continues, both networks are poised to witness mutual fortification.

2. Exploring BTC trends – is Bitcoin entering its industrial phase?

Bitcoin (BTC) has its fans and critics. And to understand what makes this cryptocurrency so polarizing, it’s worth investing a small amount of time in unpacking the concept of money. By doing so, you can appreciate the opportunities and concerns on both sides of the digital coin, as well as gain a perspective on potential BTC trends over the longer term.

Going back centuries, civilizations have purchased goods and services using various means, including exchanging livestock and paying in shells. Fast forward to today, and we have trusted fiat currencies such as the US dollar, EURO, British Pound, and Chinese Yuan.

And while digital payments increasingly dominate, technically – for example, in the case of the British Pound issued by the Bank of England – it is the physical notes and coins that represent the promise of payment from the central bank to the bearer of the currency.

Digital gold, or not?

Likening BTC to gold serves as a useful comparison in picturing a possible role for future cryptocurrencies. Although, time has yet to pass the same degree of judgement on BTC, with gold having been accepted for thousands of years as a trusted store of value.

“Bitcoin and gold are similar from both a psychological perspective and, especially, as a resource,” write the economists Wolfgang Härdle, Campbell Harvey, and Raphael Reule in a useful discussion paper on ‘Understanding Cryptocurrencies’ [PDF]. “Neither can be created arbitrarily: each must be mined and each has a finite supply (at least on planet Earth)”.

Similarly, just as it takes energy to extract gold from rock buried underground, it typically requires a vast number of guesses before crypto miners discover a suitable nonce. The probability of an input generating an output with zero as the first digit is 1 in 16 (the hash digest is hexadecimal). But to find 19 leading zeros, as in the hash digest of BTC block #802502, drops that likelihood to just (1/16)19 – an incredibly small number.

The probability of successfully hashing a new block is many times less than winning a national lottery. But, of course, crypto miners can (sticking with the example of a lottery) buy trillions of tickets per second to boost their chances of hitting upon a valid guess.

Looking at the hash rate for BTC – the number of guesses being made on finding a suitable nonce value – that figure is more than 382 million per second, and it’s measured in units of terahashes (1 trillion guesses).

In the physical world, mining equipment is big and bulky and requires industrial scale power. And the analogy holds for digital crypto mining rigs too. To be competitive, crypto miners need pools of computing hardware that’s been designed specifically for the task.

Units such as Bitmain’s popular S19 model, which is specified as delivering a hashrate of 151 terahashes per second (TH/s) and consumes more than 3kW of power at the wall, are whirring away all over the world (where allowed) to validate BTC transactions on a decentralized digital ledger.

Long-term BTC trends

Critics of such a consensus mechanism, dubbed proof-of-work, point to the power that’s consumed. But, without coming down on either side of the fence, it should be noted that managing traditional currencies consumes energy too. There’s a vast amount of backend services supporting modern banking operations, and it’s the price to pay for running systems that customers trust.

As mentioned, the use of gold goes back thousands of years, which is ages long compared with the not-yet two-decade-old practice of BTC crypto mining. We live in interesting times with ambitious projects to deliver zero-knowledge proof, privacy-preserving World IDs, and the boom in AI.

There’s an element of the unknown when new technologies emerge, and it’s fair to say that cryptocurrencies occupy that space. Parallels with the utility of gold may serve as a guide on how the story of BTC plays out, but time will tell whether Bitcoin has similar appeal, and that clock has only just started ticking.

3. Blockchain giants pour investments into Bitcoin mining | Opinion

Over the past 14 years the Bitcoin mining market has undergone rapid development which continues today as well. The crypto industry of 2023 is witnessing a new trend where market giants are investing heavily in mining and the technological initiatives around this sector.

A recent example of this is Binance – in June one of the world’s largest crypto exchanges announced the launch of a subscription-based cloud mining service dedicated to mining Bitcoin. Tether, the largest stablecoin company, also revealed a mining project in Uruguay and a $1 billion investment in the Volcano Energy initiative. Even more interestingly, major Bitcoin miners Hut 8 Mining and U.S. Bitcoin Corp are set to merge to form one of the largest public miners in North America.

What could be driving this prominent trend? Based on my experience and knowledge of the mining market, I am going to outline the potential reasons in this article.

Bitcoin mining contributes to mass adoption

Initially mining was something that regular Bitcoin users could accomplish on their computers, but it didn’t take long for new methods of enhancing mining efficiency to come forward. In 2010 the crypto market saw graphics processing units (GPU) introduced, and the first set of ASIC devices followed in 2013. Both of these new technologies became widely popular as methods of optimizing and improving upon the mining process.

The emergence of new technologies has resulted in bolstering this industry and making it more competitive. Bitcoin mining has come a long way from its early days, and today there are entire farms and data centers dedicated to mining operations. To my mind, this shift reflects the natural evolution of the industry and the growing adoption of cryptocurrencies as a mainstream investment asset.

And as the market continued to grow, concerns regarding mining’s impact on the environment gained prominence. The energy-intensive nature of mining Bitcoin raised questions about its sustainability as a business venture, resulting in the need for innovations that would improve this situation.

To address these concerns, various initiatives were undertaken. As we can see from the current news agenda, major blockchain players are putting a lot of focus on things like more energy-efficient mining equipment and renewable energy sources, such as solar and wind power. All of this is aimed at improving upon the mining process, making it more sustainable and environmentally-friendly.

These efforts and advancements underscored the growing recognition within the crypto community of the need to balance the industry’s expansion with environmental responsibility. And they are also contributing to the rapidly growing popularity of the crypto-mining field, since lowering its environmental impact can attract environmentally conscious investors who are concerned about the carbon footprint of their investments.

Lucrative rewards at stable rates 

Bitcoin mining can undeniably be a hard and expensive industry to enter. Not only do you want to find a good location with access to a lot of energy, but you will also require access to advanced hardware that comes with a hefty price tag. And that’s without bringing in the ongoing costs for maintenance and electricity that will also need to be taken into account when running a mining operation.

As a consequence of all this, the financial barriers associated with Bitcoin mining can be quite daunting, deterring many potential participants who either lack the necessary resources or are simply unwilling to take on considerable financial risks.

Yet for those who are willing to take these risks, Bitcoin mining can be a lucrative avenue to invest in due to its high return on investment (ROI). Recent estimations show that miners in 2023 are mining approximately $20 million worth of Bitcoin per day. This means that as long as you have access to efficient and continuously working mining equipment, it can be a great source of steady daily income.

One of the ways for miners to earn their income is by receiving rewards for verifying transactions on the blockchain. As the popularity of Bitcoin increases, so does the number of transactions performed with it. And, in turn, the value of the rewards gained by miners grows as well.

Not only that, but rewards are generated at regular intervals regardless of market conditions or fluctuations in Bitcoin’s price. This allows miners to have a degree of predictability in their income, making it easier to project returns and plan for future investments.

All in all, so long as you take time to properly plan your investments and long-term mining activities, this industry can offer ample opportunities for generating profit. Not only that, but the technological advancements and increasing efficiency of mining equipment that I touched on earlier have made it possible for some individuals or groups to start small-scale operations at a relatively lower cost than before.

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Harvey CHEN

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