Research on energy blockchain; Development process of bitcoin mining

Bitcoin has not yet developed into a growth period, but with the acceleration of bitcoin mining, the industry is expected to achieve substantial growth.

In June 2008, when Satoshi Nakamoto published a white paper detailing how to create a new monetary system, no one expected that the market value of Bitcoin would soar to $850 billion in less than 13. In addition, thousands of other types of cryptocurrencies have been derived from Bitcoin, which has formed the whole financial services industry and developed into a new asset class, completely changing the familiar currency types.

Our company has been engaged in bitcoin mining activities for seven years, which has promoted the development and adaptation of the industry. Below we will introduce some little-known development history of bitcoin mining and some trends that have a significant impact on the industry.

The emergence of bitcoin mining

Bitcoin is a decentralized monetary system, similar to gold, and it is a limited commodity with valuable storage means. This means that the supply of bitcoin is limited. At present, there are only 2 1 10,000 bitcoins, which is not easily affected by inflation. People who want to use bitcoin do not need to be supervised by the government that has the right to change its value or decide the right to use users.

So where does Bitcoin itself come from? Like gold, bitcoin must be mined, but not with picks and shovels, but with computers.

Bitcoin is based on blockchain technology. In order to add a block to the blockchain, miners all over the world are competing to solve an algorithm. The person who works out the algorithm first can get the transaction cost of the block and the fixed reward for issuing new coins (currently, each block gets 6.25 bitcoins), which will increase the circulation of bitcoin.

When Bitcoin was first born, mining was very easy. Miners could mine in the kitchen with laptops equipped with standard central processing units. However, with the participation of more and more miners, the competition of solving algorithms is becoming more and more fierce, which also means that miners need stronger data processing ability and updated hardware equipment. In order to run more powerful computers more effectively, electricity price has begun to be concerned. Soon, due to the fierce competition in mining, individual mining has become unprofitable.

The birth of a multi-billion dollar industry

In order to make a profit, we must expand the scale of mining business. At present, new special hardware for mining has appeared in the market, and miners have also installed mining machines in trailers and warehouses, so that large mines with thousands of mining machines can solve algorithm problems all day. The operation of large mines includes layout design, energy, software management and hardware update. Driven by these operational requirements, bitcoin mining has rapidly developed into a multi-billion dollar industry.

ARK Invest's report shows that the hardware cost of supporting the ecosystem is about $7.2 billion. In addition, the report pointed out, "Since the advent of Bitcoin-specific hardware in 20 13, we believe that billions of dollars have been spent on design, production and streaming transmission, which has also spawned an industry specializing in manufacturing such powerful and professional hardware.

Although bitcoin mining is complicated, it is profitable. Ark Investment estimates that miners can earn $654.38+0.5 billion, which comes from bitcoin transaction fees and fixed rewards.

Competition gives birth to new hardware.

The competition of bitcoin mining is growing, but because bitcoin is a limited commodity, the competition of mining is also limited. This means that mining operations need to run as fast and with high performance as possible in order to get returns.

Due to the increasingly fierce competition in bitcoin mining, the demand for computing power has increased, so the mining competition has become the competition of graphics cards, and graphics cards are the hardware that gamers usually use in high-end games. Later, ASIC gradually replaced the graphics card, which is a kind of hardware specially used for mining cryptocurrency. It is the fastest and most efficient hardware in bitcoin mining, and is currently only used for mining.

However, the hardware depends on the chip. Although chip technology is accelerating at present, the demand for chips is still in short supply. This means that mining operations need to be planned and upgraded in advance, and the necessary hardware is often snapped up. For example, Bittern has recently faced a shortage.

New technologies are the most promising to achieve profitability.

Similarly, bitcoin mining also needs to keep up with the pace of technological development, which can make mining hardware bigger, better and faster, because once the efficiency lags behind, profits will be damaged. Now that technology is constantly surpassing innovation, mining not only needs to keep up with the pace of buying new hardware, but also needs to install new hardware quickly. This is because time is of the essence, even a few days' delay will cause serious losses, so many mining operations (such as our company's mining) have rented Boeing 747 aircraft to reduce transportation time.

The number of miners in the west has increased.

For a long time, more than half of mining sources in the world came from China, mainly because of the lower cost and faster transportation in China. However, these advantages are fading as China intensifies its crackdown on bitcoin mining. According to Wired magazine, "the geographical distribution of bitcoin mining may be changing", and the business may turn to North America, Europe and Latin America. Miners also plan to find mining sites in Nordic countries, Canada and the United States, which have a lot of cheap sustainable energy sources, such as wind, solar and hydropower.

The future of bitcoin

Although there have been many fluctuations in Bitcoin recently (this is nothing new), the future of Bitcoin is bright, its value will continue to rise, and it will attract new investors. As more and more people begin to understand Bitcoin, understand its source and mining methods, people will find more value from Bitcoin.