Digital gold prospectors and the mining of valuable cryptocurrencies
The money supply of fiat currencies is controlled by the central banks. The situation is completely different with Bitcoin. Here a plan was already established with the creation of the digital currency in 2009, which regulates the issue of new Bitcoins.
New Bitcoins can be generated by solving mathematical equations. This is done by specialized high-performance computers, also called “miners”. The best known manufacturer of such miners is Bitmain.
In the context of creating Bitcoin, the term “Bitcoin Mining” is also used. In Bitcoin Mining, new data blocks are generated which are then added to the blockchain. Thus the blockchain is constantly growing. In this article we will go into the subject of mining in detail.
Bitcoin Blockchain was about 270 GB in the first quarter of 2020.
Whenever a new block is added by the miners, new Bitcoins are also emitted. As the table shows, the number of Bitcoins output per added block decreases over time. If a certain amount of Bitcoins has been generated, the reward per generated block is halved. This change in the Mining Reward is called “Bitcoin Halving”. At the same time, the mathematical equations to be solved are becoming increasingly complex.
The result is obvious: Over time, fewer and fewer Bitcoins are issued. In summary, the inflation of Bitcoin decreases over time until it finally comes to a virtual standstill. In total, only 21,000,000 Bitcoins can be generated. At the beginning of 2020, about 18 out of 21 million Bitcoins were already spent. The following table shows the Bitcoin Halving in detail.
|Bitcoin Halving||Period||Block Reward||Annual Bitcoin growth|
|1||2009 – 2012||50 BTC||2.625.000|
|2||2012 – 2016||25 BTC||1.312.500|
|3||2016 – 2020||12,5 BTC||656.250|
|4||2020 – 2024||6,25 BTC||328.125|
|5||2024 – 2028||3,125 BTC||164.062|