Nov 9, 2021

Letter #58: Miner Difficulties - Earnings on the Bitcoin Blockchain

Read now to learn what incentives miners have to protect the Bitcoin blockchain, now and centuries in the future.

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Joshua Guest
Your one-stop shop for Bitcoin education!
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Dear Readers,

Bitcoin mining is, without a doubt, one of the most important parts of the Bitcoin network. After all, Bitcoin mining is required by the Proof of Work algorithm that powers Bitcoin’s blockchain. And without Proof of Work, participants would be back to relying on trust-based systems, such as those governing fiat economies.

In spite of its importance, there are still a few misconceptions that plague Bitcoin mining. We’ve already spoken about its supposed environmental impact. Another example is that many people believe that Bitcoin miners have absolute control of the blockchain. But the reality is that miners have no more power to change Bitcoin than anyone else does. The block size war that resulted in the split between Bitcoin (BTC) and Bitcoin Cash (BCH) is proof: large numbers of miners supported the protocol that became Bitcoin Cash; however, most non-miner participants chose Bitcoin instead, which remains the larger and more successful protocol to this day.

There is perhaps an even more detrimental misconception though, and that revolves around Bitcoin’s 21 million coin supply cap. Many people wonder how the eventual mining of the last Bitcoin will impact miner incentives and whether the supply cap will be increased or eliminated as a result.

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