Dear Readers,
Mining is one of the most recognizable parts of the Bitcoin space. It is the key component of the proof of work algorithm that contributes to Bitcoin’s decentralization. And mining’s energy usage has made it a favorite target of critics who want to discredit Bitcoin.
Bitcoin mining is also largely responsible for providing security to the blockchain. The more benevolent miners there are who provide their computing power to the blockchain, the harder it is for a bad actor to attempt to process incorrect transactions.
Computing power on the Bitcoin blockchain is commonly referred to as “hashrate”, in reference to the hashes that mining computers generate in order to win the opportunity to process a block of transactions. Hashrate has become one of the key metrics by which a number of analysts and commentators judge the health of the Bitcoin ecosystem, since a higher hashrate means that more people find supporting the Bitcoin blockchain to be a worthwhile activity.
Bitcoin’s hashrate has grown exponentially in the 13 years since the blockchain began, and Bitcoin has become seemingly unhackable, or nearly so, as a result. Just check out the following chart if you don’t believe me:
Many people believe that the growth in hashrate is tied completely to the profitability of Bitcoin mining. So it’s hard for them to imagine a world where Bitcoin continues to exist if mining isn’t profitable from an income perspective. But I believe there’s an even more important reason why Bitcoin mining will continue, regardless of financial profitability:
