# Profitable bitcoin rate, The Cost of Bitcoin Mining Has Never Really Increased

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## Bitcoin Mining Profitability historical chart

Results 3. Hardware Efficiency Variations Table 2 reports a list of the Bitcoin mining hardware which consumed the least energy per hash operations at the time of their release to the market. In a previous work a power-law model was proposed by Kristoufek However, the exponential model is more consistent with what is commonly expected for the rate of technology growth, according to the Moore's Law Moore, Hash Computations Variations Figure 2 displays the total number of hashing operations per day.

We note that the number of daily hashes have increased from to in the period between September to May when this paper was written. Daily hashes have been growing at exponential rates linear trends in semi-log scalewhich is in agreement with previous observations O'Dwyer and Malone, However, we can see from the figure that there are four, very distinct, periods with different grow rates. Specifically: i mid to mid ; ii mid to early ; iii early to early ; iv early to early The estimated best-fit doubling times in these periods are respectively: 1 33 days; ii days; iii 38 days; iv days.

### Parameters & Assumptions

Daily hashes computed by the Bitcoin network. The lines are best-fits with exponential growth laws in the corresponding sub-periods. Doubling times are respectively i 33 days, during mid to mid ; ii days, during mid to early ; iii 38 days during early to early ; iv days, during early to early Energy Price Variations Figure 3 shows the variations of the energy price per gigajoule in the period — computed from the Brent Crude spot prices.

One can notice that the cost of one gigajoule of energy has two distinct levels—around 20 USD from to mid and around 10 USD from late to early Oil prices has since collapsed under the coronavirus pandemic, profitable bitcoin rate to below 3 USD per gigajoule of energy.

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profitable bitcoin rate However, while large, the rate of change in energy price is several orders of magnitude smaller than the rate of change in the number of hashes. Lower Bound Mining Cost Estimate The lower bound of the total energy costs of Bitcoin mining is estimated as the minimum energy cost of each hash multiplied by the total number of hashes computed over a given period of time a day in our case. Note that this is the lower bound estimate and the actual cost is presumably much larger.

The growth in mining costs is affected by both the changes in energy cost see Figure 3 and by the increase in the hashing rate in the Bitcoin network see Figure 2.

### Original Research ARTICLE

We note that the variations in energy cost oscillates in a much narrow band with respect to profitable bitcoin rate changes in the daily number of hashes and therefore, the minimum Bitcoin mining costs Figure 4 mostly mirrors the growth in the total number of hashes.

Transaction Volume Variations During the last 10 years the Bitcoin network activity has also increased with increasingly larger amount of money transferred daily through the network. Figure 5 reports the total transferred value per day in the Bitcoin network specified in USD. Profitable profitable bitcoin rate rate can see that the total daily volume of transactions has grown from about one thousand USD in to nearly one billion USD in for an increase by six orders of magnitude.

Daily transaction volume Vt reported in USD.

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The largest variations occurred in the first few years then, afterthe ratio value has stabilized into a plateau with then a jump to a higher plateau at the end of presumably due to the large decrease in Bitcoin price from over 19, USD in December to just a little over 3, USD in December Despite the change in this relation between mining costs and transaction volume in —18 and the change in Bitcoin prices in the same period, we note that in general this ratio is not correlated with the price of Bitcoin.

There is actually a small negative correlation between the two for the daily variations. Using regional electricity prices to calculate the mining costs shows a similar pattern over profitable bitcoin rate, though on a slightly higher level after with the mean ratio being 0. Note that this band of oscillation is within one order of magnitude whereas the underlying quantities Ct and Vt vary of six orders of magnitude during the same period.

If profitable bitcoin rate limit our analysis to the last period after the end ofwe obtain a mean ratio of 0.

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The band is the region between the first and tenth decile and the center line is the mean value, which is 0. Discussion and Conclusions The proof of work allows a network of anonymous and untrustful parties to operate together without central authority control.

It is a powerful instrument to keep a distributed system secure from malicious attacks. However, it has a high cost. We estimate that presently at least a billion USD per year is burned by the Bitcoin network for the proof of profitable bitcoin rate.

This amount corresponds to a one million times increase with respect to the costs in Using data from tothis paper quantifies the lower bound for the energy costs of Bitcoin mining and examines the relationship between this bound to the total value of transactions over time. We reveal that the ratio between mining cost and total transaction volume has not increased nor decreased over the last 10 years despite Bitcoin mining activity having increased by ten billion times during the same period.

Such an overall constant ratio is consistent with an argument, introduced by Astesuggesting that such profitable bitcoin rate ratio must be a sizable fraction of the transaction volume and it corresponds to the minimum fraction that an attacker must double spend to profitable bitcoin rate a profit the quantity p in Equation 2. This profitable bitcoin rate a lower bound estimate that realistically could be an order of magnitude larger if all extra costs, beside the oil equivalent cost of mining energy, are included.

We could therefore conclude that in the Bitcoin network the cost of proof of work is not at all too high. On the contrary it is actually too low to protect against double spending attacks.

However, the proof of work is not the sole mechanism that provides protection of the Bitcoin network.

The system also depends upon the high entry barriers in terms of mining hardware and facilities costs. Further, Bitcoin value is built upon community trust so once a majority attack has been detected, the Bitcoin value is likely to collapse together with the potential attacker gains. Finally, profitable bitcoin rate attack news trading strategies a large fraction of the Bitcoin volume would be most likely detected by the network before its completion.

Distributed systems and Blockchains can be secured through several other mechanisms that do not require computationally intensive proof of work.

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Indeed the proof of work is a mechanism introduced to produce qualified voters in profitable bitcoin rate system of anonymous untrustful parties. Any mechanism that can verify identity of the voters' or that can in any other way avoid uncontrolled duplications of the voters can reduce or eliminate completely the cost and even the need of a proof of work.

However, these other mechanisms must relax also some other properties, such as anonymity, profitable bitcoin rate, or equalitarian distributed verification. Data Availability Statement The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.