Bitcoin MiningBitcoin energy consumption has been an issue since it gained commercial attraction. Some critics and experts have highlighted it as a negative aspect of bitcoin, and the future seems unfavorable for the miners. On the other hand, there is a contradiction in considering the ineffective use of energy as an ever-lasting and uncontrollable aspect for bitcoin miners.
The impression that bitcoin mining is going to be less profitable in the future and energy consumption will make things difficult for miners is not precisely that transparent. Statistical analysis portrays a different side of the story.
To what extent are Bitcoin miners successful in the industry?
Bitcoin mining revenue grows more slowly than market cap and transfer volume as the block subsidy winds down and trends towards transaction fees only. This is what people get wrong when they incorrectly think that BTC’s energy usage is an exponential problem.
The opportunity to earn for miners has always been there since it earned recognition. The table below indicates miners making escalation throughout the period.
The above table shows the miner fees as a percentage of the total transaction volume. In the last decade, annual miners’ fee has shown an upward trend throughout the decade since 2011. There has been substantial growth in annual fees as a percentage of transaction volume which states how miners have been rewarded for their efforts.
Considering the volatility of BTC, it’s not likely to argue that annual monetary velocity is volatile. It would be a lot less volatile if it could be adjusted to exclude quick hops for exchange shuffling mixers.
Bitcoin energy usage is not a big issue anymore
When it comes to the problem of too much energy utilization in the crypto industry, there are people who believe that it’s a threat to the environment. The problem is that many people are not aware of the fact that only less than one-tenth of one percent of BTC is estimated to use. Secondly, a significant percentage of the energy that Bitcoin uses is actually from wasted energy sources.
Whereas, people who believe that Bitcoin uses or will eventually use too much energy are not entirely correct. The fact is that Bitcoin eventually won’t use enough energy to be secure. It would be possible once the block subsidy mostly goes away.
Many people would be aware that bitcoin fees got higher when the Segwit soft fork was introduced. Moreover, it also resulted in a new spike in Segwit adoption, hence, the network got more efficient over time.
Another misunderstanding that is quite common among a lot of people is that they think bitcoin will eventually become insecure. The reason behind this is the lack of fees but they don’t take into account Segwit adoption. They also seem to believe that transfer volume is stagnant. The reality is different as volume is growing a lot but in an increasingly efficient manner.
Considering the scenario in the very long run, Assuming bitcoin becomes wildly successful and a systemically important asset. Furthermore, the payment system used by over a billion people at 10-20x its market capitalization would probably reach several tenths of one percent of global energy usage. If it is unsuccessful and doesn’t escalate from current levels, its energy usage will automatically stagnate and reduce as the block subsidies continue to decline.
Conclusion
It is essential to understand that the Bitcoin network’s energy usage is restricted by the amount of utility it provides. People often assume a certain period of time into infinity. Things are different, the design of the network for the long run is different than the design for the bootstrapping phase.
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