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Can Bitcoin miners ever go bankrupt? How much money do they make? And what are the use cases?
How do Bitcoin miners contribute to the network, how mining pools work and how much electricity is spent to mine one Bitcoin block? What are the Bitcoin use cases?
Krit, of my Udemy students from my blockchain course, asked me some really interesting questions about Bitcoin mining. As you can see from the article below, I get quite excited when I talk about mining!
Krit, this one is for you.
1st question: Is the mining fee paid to only a successful miner of each block, says out of 1 out of 8,000 nodes? If yes, it seems that most miners will go bankrupt, except that miners pool resources as a group. One computer will spend 270,000 years to mine one block. I can’t imagine how large a single miner can have computer capacity to mine one block in 10 minutes. Can you give any idea what is total electricity in KWatt to mine required to mine one block?
This is a really cool question! Let me break it down:
The block reward is fixed at 6.25 BTC, and it halves every 4 years or, to be more accurate, the halving occurs every 210 000 blocks, considering that we have a new block every 10 minutes, which translates into approximately 4 years. So the next Bitcoin block reward halving will happen sometime in early 2024, and the reward will be cut to 3.125 BTC.
Additionally, every time a user sends a Bitcoin transaction, he will have to pay a transaction fee. The miner will also receive the transaction fees for the transactions that were included on that same block.
So, In the Bitcoin case, the mining reward is currently 6.25 BTC plus fees paid by the users, and this is paid to the miners on average every 10 minutes when they mine a block. How much money is this? Well, I’m just going to pick up the most recently mined block at the time I’m writing this. You can also check the block by yourself by following this link.
Here, we will be looking at block 692365. The miner that mined this block (in this case was a mining pool called F2Pool) has received a block reward of 6.25 BTC plus a fee reward of 0.0079…
