Encrypted miner antminer S9 s9i s9j 13.5T 14T 14.5t bitcoin miner antminer S9 s9i s9j with original PSU
Encrypted miner antminer S9 s9i s9j 13.5T 14T 14.5t bitcoin miner antminer S9 s9i s9j with original PSU
Direct New Asic Bitmain Antminer S9 S9j S9i Price Mining Machine Used Antiminer With Pci
Miners are customized products according to customer's requirements, and therefore investments need to be cautious. Product's after-sale service is as follows. Once the purchase is completed, it means the recognition of the policies. 1. There is 100% refund and return policy after the payment. 2. A 180 days warranty for miners by factory. We only warranty the items are orginal. If the product has issue, please contact the factory.we will also assist the buyer about it. 3. Affected by the modes of payment/ USD exchange rate and the bitcoin market, the price of the product may be adjusted at any time. 4, We often write the lower price in the invoice to make the buyer pay less tax. Buyer also can tell us what name and how much invoice for the order. If not leave message or contact us, we will write lower price in your order invoice. 5, We often ship the miners by DHL, if the DHL can not reach the address, we will change the ship method, please understand it. 6, Buyers should deal with customs clearance. (Exclude Russian. All Russian clients are free tax, Russian orders will ship from special lines such as CDEK and so on, we will deal with the customs clearance for you to avoid custom problem. The ship time to Russia will need about 5-8 work days, please wait patiently. It support tracker number and door to door!) 7, We can also support ddp shipment method to make people tax free.If you like, please contact us. We can also offer asic miners overclock service so that the miners can get 20%-40% more profit!!! Overclock innosilicon A9 from 50K to 60K. Bitmain Antminer S9 S9j S9i Overclock antminer T17 from 42T to 45-50T. Overclock antminer S17 S17pro to 63-70T. 2021 Antminer S19 Pro 110th SHA256 Overclock antminer S17+ to about 90T. These picures shows the status of the overclock. This is for overclock A9 from 50k to 60k.
What is cryptocurrency mining and why is it so important?
The term mining in the context of digital currencies may conjure up various images in your head, with parallels likely drawn to gold or coal extraction from the earth. In reality, cryptocurrency mining is an entirely digital paradigm that simply facilitates honest collaboration among strangers. While mining does sometimes generate economic value in the form of rewards, it serves the greater purpose of keeping a decentralized network functional and secure. If that description sounds too complicated, don’t worry as it is surprisingly straightforward. In the following sections of this article, let’s explore what it means to mine a digital currency and why such a system needs to be present in the first place. We’ll also discuss nuanced aspects such as its profitability and potential impact on the environment along the way. While the majority of this article will focus on Bitcoin mining, the same principles apply to most other cryptocurrencies. The only exceptions are digital assets that employ alternative methods to achieve consensus, such as Miracle. Why is cryptocurrency mining necessary? The first and most well-known application of mining involves Bitcoin, which was created by the pseudonymous Satoshi Nakamoto. While attempts at creating electronic currencies were nothing new even back in 2009, Bitcoin was notable because it was the first truly decentralized currency. Prior to Bitcoin’s inception, all currencies relied on a central authority of some sort. This approach is not ideal for a number of reasons, not least because you have to trust the issuer and everyone higher up in the hierarchy. Even a common service like PayPal, for instance, has complete autonomy over funds you store on the platform and could freeze them at any time. Bitcoin, however, flattened this centralized hierarchy. You don’t need permission from a central bank or intermediary to use it, nor are you required to sign anything. In fact, all you need is an internet connection. And once you acquire some cryptocurrency, nobody can confiscate it behind your back.
Bitcoin achieved this level of decentralization and security through an algorithm called Proof of Work. Mining is simply the real-world application of this algorithm. Put simply, Bitcoin employs a system wherein anyone and everyone can propose new transactions. However, these transactions are only considered valid when other participants on the network reach an agreement on their legitimacy. The system also ensures that past transactions cannot be edited or reversed by anyone with malicious intent — granting Bitcoin the property of immutability. While arriving at such a unilateral agreement may sound simple, it is actually an extremely difficult endeavor — especially when real money is on the line. Would you trust a bunch of strangers to deliver your money to the right person? Most likely not. To that end, Satoshi Nakamoto believed that the only way to achieve consensus in a cryptocurrency network was to make some users work for it in exchange for some rewards. And, thus, the system was named “proof of work.” Proof of work is essentially one CPU, one vote.Satoshi Nakamoto We’ll explore this interplay of “work” and incentives in a later section. For now, know that every stakeholder in the cryptocurrency ecosystem is incentivized to act in the best interests of the network, so they are extremely unlikely to support malicious acts. What does mining achieve? Let’s look at a typical cryptocurrency network to answer this question. Participants can be broadly classified into three groups: Users: These are end-users — participants like you and me — that send and receive funds. Users initiate transactions through their crypto wallet, which is essentially a piece of software. That, in turn, broadcasts relevant details (such as the amount and destination address) to the rest of the network. Nodes: Nodes are volunteer users that maintain a copy of the Bitcoin blockchain on their computers. They also take on the responsibility of acknowledging new transactions broadcast by the users. Finally, nodes enforce a comprehensive list of network-specific rules that all incoming transactions must adhere to. Mining nodes: These are specialized nodes that volunteer to verify the aforementioned incoming transactions. There is no risk or entry fee involved, as long as the miner can contribute computational power towards the verification process. In return, they receive compensation in the form of token rewards, transaction fees, or both. As you can probably tell by now, there is a very clear symbiotic relationship between all three groups. Nodes will not accept illegitimate transactions from users. Meanwhile, miners have to abide by the rules of the network in order to receive their compensation. Large amounts of computational power is neither cheap nor infinite, so miners spend it judiciously by their own volition. And therein lies the beauty of mining — it enables decentralized consensus and is self-regulating in nature. It’s worth stating that you don’t have to understand mining in order to simply use a cryptocurrency. You probably don’t think about how banks process transactions on the backend either. Most digital exchanges and wallets these days have simplified user interfaces. Under the hood though, Bitcoin and most cryptocurrencies use a ledger that keeps track of all transactions since the birth of the network. This ledger is what is commonly referred to as a blockchain. The term also offers up a pretty big clue to understanding how mining works. In the context of Bitcoin, new and unconfirmed transactions are collected in a block every 10 minutes. This block will also contain a timestamp and a reference to the block that came before it.
This means that all blocks are linked to each other, going back all the way to 2009 — kind of like a block…chain, get it? So what does all of this have to do with mining? Quite a bit, actually. Miners are tasked with generating these blocks, and while the process is quite straightforward, it is anything but easy. Read more: What is a blockchain? How mining works: A cryptocurrency transaction’s lifecycle Shortly after a user’s wallet broadcasts a transaction, a nearby node will pick it up and add it to the Bitcoin mempool.
The mempool is basically a space where unconfirmed transactions live. Every few minutes, miners from around the world reach into this mempool and pick a bunch of transactions to include in the next block. A typical Bitcoin transaction is under 1KB, so miners can fit quite a few transactions into a single 1MB block. Still, miners generally prioritize transactions with the highest fees for maximum profitability. Once the block has been assembled, miners can’t just race to submit it at this point. That would be a rather unfair system, where connection speed would be the sole determining factor. Instead, each miner has to spend computational power to solve a mathematical function unique to that particular block. The first miner that computes a valid solution has their block accepted by other nodes. This is why the algorithm is referred to as proof of work — miners have to prove their work in order to earn their reward. But what is this mythical mathematical problem and what does a valid solution look like? In a nutshell, miners run a computer algorithm that takes the block’s data as an input and generates a fixed 256-bit output. The output is usually represented in the hexadecimal format, where each character is four bits in size. For instance, the text “I love Bitcoin” would have the corresponding hash that is exactly 256-bits long (represented by 64 hexadecimal characters):
024a8a19f6d71e090e93602b64d0fe0d83fd0e22841778e5d790e54d307b0104 Generating one such hash is a pretty trivial job for any computer, and even humans can do it. However, going the opposite way (finding the original input from the hash) is nigh on impossible for anything less than a supercomputer. So if even a human could do it, where is the challenge? Well, cryptocurrencies impose an arbitrary restriction to increase the difficulty of finding a winning hash. In Bitcoin’s case, miners need to find a hash that has at least 19 leading zeros. Take the following hash for example, which comes courtesy of Bitcoin block 692174: 0000000000000000000100a4681fe264d4ac31e6a5fd0ce8b78a0f807a98289b This is achieved by adding a random number, called a nonce, to the end of the block data for every single hash calculation. In other words, each time the input is modified, a new corresponding hash is generated. For the aforementioned block, the nonce value is 1,567,882,533. Armed with the block data and the nonce value, you could calculate the hash (by hand or computer code) to verify that the work has indeed been done. In this way, miners from around the world calculate trillions of hashes every second until they find the first one that meets the requisite criteria. The performance of mining hardware is typically measured in terahashes per second. Even then, you would need an army of them to find a single valid solution. How mining prevents history from being rewritten Remember how every block is linked to the preceding one in a blockchain? Now consider that any potential attacker would not only need to compute the hash of the next block faster than everyone else, but also that of every single previous block. And if the chain is broken even once, the network will automatically know to discard the proposed solution. Satoshi Nakamoto explained transaction permanency in the Bitcoin white paper as well. More specifically, “Once the CPU effort has been expended to make it satisfy the proof of work, the block cannot be changed without redoing the work.” Since older transactions are more trustworthy, merchants accepting payments in Bitcoin will often wait for your payment to age by a few blocks. This is also known as “confirmations” in many wallet programs, such as Electrum: Calvin Wankhede / Android Authority In the above screenshot, the clock at 2:00PM signifies one-of-six confirmations for both transactions. Six confirmations are the gold standard used to guarantee the success state of a Bitcoin transaction. However, three are often accepted for low-value transactions as well. Notably, new blocks are discovered on the Bitcoin network roughly every 10 minutes or so. If a significant deviation occurs, the network automatically adjusts the hash calculation difficulty to bring it back in line. You may wonder what happens to the miners that fail to compute a valid solution in time. The answer’s pretty simple: they get nothing. Since blocks are found roughly every 10 minutes in the case of Bitcoin, everyone starts over and tries to find the next solution. Cryptocurrency mining is an arbitrary winner-takes-all situation in which the only guarantee is mathematical probability. If you dedicate a decent amount of computational power to the network, the laws of probability dictate that you will stumble upon a solution sooner or later. A miner contributing 1% of the total Bitcoin hash rate, for instance, has a 1 in 100 chance of finding a block. Understanding how miners are incentivized We now know how mining works and why it is important. But how do miners receive compensation for their work? Put simply, there are two ways in which a cryptocurrency network rewards miners, namely block rewards and transaction fees. In the case of Bitcoin, each block generates 6.25 BTC — and is credited only to the miner with the winning hash. In 2009, that figure was 50 BTC, which is how we now have 19 million Bitcoin in circulation. Since the network dictates a self-imposed limit of 21 million Bitcoin, mining will continue yielding rewards until that threshold is reached. However, Bitcoin’s block rewards drop by half every four years. This means that the final 21-millionth token will not enter circulation until the year 2140. Block rewards work differently depending on the currency. Ethereum, for instance, has a fixed 2 ETH block reward with no hard cap. Transaction fees represent the second source of revenue for miners. As previously mentioned, transactions with the highest fees in the mempool are prioritized by miners. This leads to a bidding war when the network gets busy, as thousands of individuals pay higher and higher amounts to settle their transactions as quickly as possible. Etherscan The above screenshot of Ethereum block 12907670 highlights all that we’ve learned so far. The total reward earned by the miner in this instance was 2.4467 ETH. That figure comprises both the 2 ETH block reward and a 0.4467 ETH transaction fee component. It also tells us that the block included over 200 transactions and was 99.94% full. Notably, Ethereum began destroying transaction fees in August 2021 as part of the London network upgrade. This move was aimed at making the network deflationary, since Ethereum’s total supply has been on a steady climb for years now. Given how burning or destroying fees affects a miner’s bottom line, it’s not surprising that the mining community vehemently opposed this proposal initially. Nevertheless, it shows that while miners have definite revenue streams, the specifics can differ significantly from one cryptocurrency to another. The economics of mining: Not a quick buck Mining may seem extremely lucrative if you are in the know. However, simply participating in the process does not guarantee a profit. As you can imagine, there are significant costs involved in running a mining operation. At one point in time, a desktop or laptop could mine several Bitcoin within a matter of days. These days, however, even with a few dozen high-performance computers, you might never find a block. This is because cryptocurrency mining has become increasingly difficult in recent years, computationally speaking. Specialized hardware, or application-specific integrated circuits (ASICs), excel at calculating hashes and nothing else. They pretty much leave consumer, off-the-shelf hardware in the dust. The upfront cost of acquiring this sort of hardware is a huge deterrent for average folk, however, and the Chinese manufacturers that make them usually prefer selling in bulk. While some cryptocurrencies like Ethereum and Monero have employed ASIC resistance to encourage miner diversity, others like Bitcoin are now ASIC-only. Still, this means you could mine Monero on the computer or smartphone you’re reading this on, as long as your hardware is relatively recent. Ease of mining aside, whether it is worthwhile for you depends on one more crucial factor, namely the cost of electricity. In many cases, it can be a deal-breaker. Crunching the numbers Take the Antminer S9, for example, which is an ASIC miner from September 2017. It can output 13.5 terahashes per second and has a rated power draw of 1,300 watts. If you plug those numbers into the profitability calculator at CryptoCompare, it quickly becomes evident that this setup is not profitable at all. The biggest contributor to this problem is the cost of electricity. Even though the Antminer S9 can earn you 0.0037 BTC or $120 per month in 2021, you would pay as much or more in electric costs. Does this mean that the S9 is useless or e-waste? Not exactly. While we’ve estimated the cost of electricity to be $0.2 per kilowatt-hour, that figure can differ based on the region you live in. Germany’s average electric prices, for example, hover around $0.3/kWh. In Iran, on the other hand, you can expect to pay as little as $0.01/kWh. It’s not surprising then that mining operations have cropped up in regions that have cheap and abundant sources of electricity. In fact, US-based mining company Riot Blockchain relies on solar, wind, and hydroelectric sources for around 56% of its electricity needs. With the low energy costs on self-owned solar installations, inefficient hardware becomes profitable too. For modern hardware such as the latest Antminer S19 Pro the profits are even more lucrative. Keep in mind, however, that individual pricing for such hardware can easily approach $10,000. Unless you’re buying straight from a factory, it’ll take you months to make back your initial investment. And by that time, you can expect profits to slowly recede as well due to increased competition. So is mining unprofitable? Absolutely not — and the chip shortage of 2021 is proof. However, mining is certainly a game of hyper-optimization that requires quite a bit of technical expertise and patience. See also: The global computer chip shortage explained Do cryptocurrency miners operate independently? For a cryptocurrency to be truly decentralized, each miner should ideally only control a tiny fraction of the network’s total hash rate. Indeed, most miners back in the early days of Bitcoin were individuals who used their laptops or computers to mine new blocks. Over time, however, the allure of profit has motivated many enterprising miners to purchase entire data centers’ worth of hardware for maximum profit. This presents a unique problem since the probability of finding a block has become astronomically tiny for most small-scale miners. Thankfully, a solution — or more appropriately, middle ground — to this problem has emerged in the form of mining pools.
Mining pools are what you get when a group of people band together and combine their computational power to boost their chances of finding the right hash. Any reward earned is then split between all participants in the pool, depending on the amount of power they contributed to finding that block. Joining a pool vastly reduces the risk of running into bad luck for everyone involved since probability is on their side. Pools generally charge a small fee to coordinate everything — typically under one percent for large-scale miners. Since cryptocurrency blockchains are transparent by design, we can see exactly how influential these pools are. In the case of Bitcoin, over 70% of the network’s total hash rate comes from known mining pools. However, no pool controls a majority stake, which means that the cryptocurrency is sufficiently decentralized. Hash rate centralization is a very tangible threat to cryptocurrencies — especially smaller ones that struggle to attract miners. When one entity controls a majority stake in a network, the cryptocurrency becomes vulnerable to attacks. Looking at Bitcoin’s hash rate figures, however, there is no real cause for concern. Cryptocurrency mining is an extremely contentious topic these days, with many contradictory or abstract explanations thrown around. Hopefully, this article has shed some light on what goes on behind the scenes and how a system of incentives keeps a trillion-dollar network honest. For further reading, check out our deep-dives into Bitcoin and Ethereum — the latter of which is planning to do away with the proof of work algorithm and cryptocurrency mining altogether.
Projecting Bitcoin’s Future Energy Use
Due to the level of publicly-available information about Bitcoin, you would think we’d get better attempts at analysis from critics. One of the most widely debunked, yet still widely referenced claims of “academia” is that Bitcoin will single-handedly increase the planet’s temperature by 2 degrees Celsius. By the end of this piece, you’ll see that the opposite is true, with Bitcoin’s emissions likely to have already peaked a few months ago, and that in 10 short years, it’s likely that Bitcoin won’t emit anything at all. When one understands the basic fundamentals of business, competition and innovation, projecting future energy use of Bitcoin is trivial. Indeed, I and many others have done it with some degree of success in 2014, 2016 and 2018. I’m not able to see into the future this way because I’m necessarily wise or intelligent, I’m able to see into the future because Bitcoin voluntarily shows it to me. I just have to understand where to look. The key to my “predictive successes” over the past seven years all boils down to a strong assertion that Bitcoin mining is the closest thing to a perfectly competitive market that has ever existed in the real world. In the next sections, I will go through the basics of perfect competition and how miners tick as a result of this. I will then provide five- and 10-year predictions on price, hash rate and technology, and the energy mix of the Bitcoin network. From there, I will conclude with the total energy use and emissions of the Bitcoin network in 2026 and 2031. Perfect Competition The example of “the hypothetical firm in a perfectly competitive market” is taught in most introductory economics classes. A literature review of primary academic texts identifies nine conditions that define a perfectly competitive market. In 2014 (page 35), I argued that only four of the conditions had been met. With the benefit of an additional 18 months of lived experience and data, I then argued, perhaps prematurely, that six of the nine conditions had been met (page three). Two and a half years later, in August 2018, we were still stuck at six (pages three to six). Another three years later, today, I’d be happy to say that seven conditions have now been met. We will go through the nine conditions, very briefly, point by point. For a fully detailed analysis, you can revisit my earlier work linked above. Homogeneous products: Met. Guaranteed property rights: Met. Your keys, your coins. Your node, your rules Non-increasing returns to scale: Met. See GHash.io in 2014. Zero transaction costs: Met. See Lightning Network and Bitcoin Layer 3 as contemporary examples. Perfect factor mobility: Met. See recent seasonal and current China ban miner migrations as contemporary examples. No barriers to entry or exit: Met. Bitcoin is voluntary to enter/exit. Many buyers and sellers: I wanted to say “not met in the short term” on this one, but the data is suggesting that there are over 70 million Bitcoin users as at December 2020, which misses the past six months of mania that we just witnessed. It is arguable whether 70 million to 100 million users is actually that many, as the market is still illiquid enough to shed 50% of its value in a few weeks. Although there are “many buyers and many sellers,” the “many buyers, few sellers” and “few buyers, many sellers” scenarios still occur too frequently. Perhaps we’ll call this one “halfway met” in the short term, fully met within the next five years. Perfect information: Not met in the short term. While there are over 70 million Bitcoin users, the extreme volatility leads you to conclude that information is not yet perfect. There are still several insiders that get inside access during extreme market events, while retail investors panic sell in absence of this inside information. As we grow from 70 million users to 700 million users, this will stop being an issue. Indeed, most people still haven’t even heard of Bitcoin, let alone accessed any information about it. Most likely, this needs another five years to resolve, but not longer than 10. No externalities: Not met in the short term. Only externalities that exist are driven by the grid, not Bitcoin. All ASIC mining equipment is nearly fully recyclable. Further, ASIC equipment is now running for longer than ever due to slow hash rate growth (more on hash rate growth later!). As Bitcoin becomes the world’s flared methane sink, the externalities will be zero or positive. Most likely, this needs another five years to resolve, but not longer than 10. Now that we have demonstrated that the nature of competition in Bitcoin is near perfect, we can discuss the significance of this assumption, and what it allows us to conclude when it comes to making five- and 10-year projections. Perfect Competition And Miner Decision Making The Porter’s five (or six) forces framework is a mainstay of the MBA curriculum. The forces within the Bitcoin mining market are illustrated below. From my 2016 work: “Mapped out, prospects look quite daunting for an industry competitor. They cannot easily protect themselves from new miners or substitute products such as other digital currencies. [U]nless they are an innovation leader in the fields of hardware R&D and manufacture, data centre ownership, and/or electricity provision, they have little to no control over their suppliers either.” This supplier power has been demonstrated by an almost complete lack of semiconductors being made available to produce new ASICs, which is likely to continue for two or three more years until more foundries are built. Competition is stiff within the mining industry, and a prompt extinction awaits if you are not a cost or innovation leader. This is expected — economic profit tends to zero in long-term equilibrium in a perfectly competitive landscape, and the marginal cost of producing and the market price oscillate around an equilibrium point, with evolution and improvement the only way to stay in business. In such competitive markets, there is also a natural tendency for the market to be dominated by three or four players. The Pareto principle, also known as the 80/20 rule, states 20% of the market participants control 80% of the market. In November 2015, the five largest mining pools provided 79% of mining power. In June 2018, the largest five provided 70% of hash rate, with 78% of power coming from the top six. Now, it’s 63.8% for the largest five, and 73.9% for the top six. That said, the pools are not monolithic entities. Again, from 2016: “In a perfectly competitive market, a firm’s decisions are highly predictable. All firms need to decide to start up, how to run their business as cost-effectively as possible, and whether to stay in business or not. In the Bitcoin world, the decision-making process relies on the market price of bitcoin, operating expenditure, and the network hash rate. It also indirectly relies on the continued faith and investment of miners in the value of their commodity i.e., continued research, development, capital expenditure, and strategic partnerships with collaborators. The below figure shows the relationship between hash rate and price and shows the outcomes for miners in six different scenarios. Effectively, if the price of the commodity increases beyond the cost to mine it, miners will enter the market until the price and cost are equal. If price decreases, miners leave the industry until there are only profitable miners remaining. If price is dramatically lower than cost to mine, some miners may elect to simply buy bitcoin until mining is profitable again. If the market is flat, profit tends towards zero until the market is shaken up again. This is similar to the workings of miners in the physical commodity and oil industries. The difference is that a Bitcoin firm’s decisions take hours and days to implement, and days and weeks to take effect, instead of months and years. The same is true regarding the time taken to reach equilibrium after a shock; ‘two-to-four times the duration of the production-to-storage cycle’ (i.e., months to years) for commodities, weeks for Bitcoin [based on the ~2-week difficulty cycle].” Taking a look at the three-year hash rate history below, we see periods like October 2020, where the hash rate plummeted almost 50% in two weeks due to miners physically migrating within China to take advantage of cheap hydroelectricity during the wet season. Hash rate recovered completely in one month, or, around two difficulty cycles. The chart below is replete with examples of this seasonality. How many times do you remember seeing a “Bitcoin Mining Death Spiral” headline, only to see hash rate fully recover within two to four difficulty periods? In recent weeks, China issued wholesale bans on mining, driving Bitcoin’s hash rate on June 20, 2021 temporarily back to levels not seen since late September 2019. Recall “perfect factor mobility” in perfectly competitive markets however, and most expelled Chinese hash rate should be back online within two to four difficulty periods, with the balance coming back online only a few more difficulty periods after that, considering the size of the task. Now that we understand how competition in Bitcoin mining works, what makes miners tick, and the obstacles they face, we can very easily predict their behavior going five or ten years into the future. The only way to survive is through cost or innovation leadership, and this will almost always mean leadership in energy sourcing (OPEX) and hardware sourcing and/or design and manufacture (CAPEX). To be sure, miners are not environmentalists; but if clean energy is the cheapest energy available, that is what will power Bitcoin. Predictions Price Assumptions People hate admitting it, but the only thing that matters in Bitcoin is the price. All else is absolutely secondary. I cannot impress upon you how important the price is. Developers aren’t important. Hardware providers aren’t important. Miners aren’t important. Nothing is. If the price doesn’t continue to rise, nobody is going to commit to mining or investing, and therefore, no devs, no software, no miners. To that end, the amount of energy dedicated to mining Bitcoin will be 100% dependent on the price of bitcoin, and the cost to mine it. During times of stability, such as during the absolute depths of a bear market, the cost to mine bitcoin is generally very close to the price. I am yet to meet anyone who has ever made an accurate bitcoin price prediction five days into the future, let alone five years into the future, so we will look at a few scenarios. Price and hash rate have typically been very highly related, but with the recent and predicted-to-be ongoing chip shortages, hash rate and price may decouple, with the price-to-cost difference made up with hardware cost increases instead of deployment of more hardware. For example, if the price of bitcoin is $30,000, and it costs miners $20,000 in OPEX to mine a bitcoin, then the market will necessarily price hardware so that the CAPEX component makes up the other $10,000. We are seeing this phenomenon right now. As can be seen in the secondhand ASIC market, the price of old Antminer S9 units is in near lockstep with bitcoin, with the last shipment of S9s leaving Bitmain’s factory at $90 each in late 2020, now fetching $300 to $400 on eBay. The pressure exerted by the invisible hand to reach price-cost parity will always be immense. Either way, one would expect a higher hash rate if the price is dramatically higher, all else considered. Scenario One: 0% Annual Growth In Daily Demand Whilst many think that bitcoin sees phenomenal daily volumes in the order of tens of thousands of BTC or billions in USD per day, the sad reality is that this is basically a group of 1,000 to 2,000 whales and entities wash-trading between each other, effectively just biding their time robbing naive retail investors with nausea-inducing swings until the next bull run. The net absorption of the daily inflation is absolutely critical, despite it being only 900 coins. At the current market price of around $30,000, the inflation to be absorbed yearly is 328,500 BTC, or, about $9.8 billion. All this takes is 2.7 million dedicated savers committing $10 per day in one of the many available automatic buying plans, and holding their bitcoin off an exchange in cold storage. The reason the “off exchange” aspect is so critical is because most of the wash-traded volume mentioned above isn’t even real, it’s mostly rehypothecated bitcoin or a futures product. If coins remain on an exchange, a fair assumption is that they are used for trading, as there are no proof-of-reserves requirements on the vast majority of exchanges, and other financial firms openly rehypothecate and state so in their terms and conditions. These low numbers will either make you pessimistic about Bitcoin’s present, considering the trillions of freshly printed dollars sloshing around the legacy system. Alternatively, it could make you fiercely optimistic about the upside of potentially having 100 million retail investors saving $10 per day, quickly skyrocketing the price to well over $1 million dollars per coin, with $1 billion a day relentlessly crashing into a market producing only 900 new coins, and easily absorbing any excess being sold by speculators. So, assuming 0% growth (but also 0% decline), the price will be $30,000 until the halving, where it will soon increase to $60,000 and stabilize until the next halving in 2028, where it will increase to $120,000, and remain so until 2032. Therefore, our “no-growth,” five-year (2026) price estimate is $60,000, and the 10-year (2031) estimate is $120,000, a market cap of just under $2.5 trillion. Scenario Two: 25% Annual Growth In Daily Demand One of my pet hates is hearing Bitcoin influencers talk about bitcoin returning 200% compound annual growth rate (CAGR) since inception, or 120% the past five years. These figures are only useful to those lucky enough to have bought once in 2010 at market inception, or once in 2015 to 2016 during the depths of the post-2013 bear market. It took exactly three years and four months for the price to never be below the December 2013 high of $1,175 again — CAGR = ZERO. The jury is still out on whether the 2017 high of about $20,000 has been passed once and for all or not. The only acceptable CAGR figures must come from the humble regular saver. This is their performance over the past eight years (two halving cycles). It’s certainly not bad at all, but it is most certainly not 120% or 200% CAGR. Let’s assume the absolute worst of the above performance results, the four-year annualized growth rate, about 50%, and halve it. This results in a price of $183,000 in 2026, and $1,118,000 in 2031, a market cap of around $23 trillion. Scenario Three: 50% Annual Growth In Daily Demand Since we assumed the worst of the long-term performance results above, this time, we will still assume so, but not halve it, and just go with a 50% annual growth rate. This results in a price of $455,000 in 2026, and $6,920,000 in 2031, a market cap of about $140 trillion. Hash Rate And Technology Assumptions In June 2018 (page nine), I compared the latest miner at the time, the Bitmain Antminer S9i, with the leading model in January 2015, the Antminer S5. In that 18-month period, ASICs increased their efficiency nine-fold, consuming only 98 watts per terahash (W/TH), down 89% from 890 W/TH in 2015. Three years on, and the Antminer S19j Pro achieves 29.5 W/TH, a further 70% reduction in energy. Although the aforementioned chip shortage will most definitely stifle supply dramatically for at least two more years, innovation will not be stifled, and I would assume an efficiency of 15 W/TH in 2026, and 7.5 W/TH in 2031. In terms of overall hash rate, average growth rate has been on a downward trend for several years, while volatility in growth rate has been on an upward trend. This could be due to recent production and supply issues, seasonal migrations or that the installed base of ASIC miners is now so large that the marginal additions from new production are becoming less significant. If the latter isn’t the case already, it likely will be in 2026, and most definitely will be in 2031. Anything more than average growth of 1% per difficulty epoch would be highly unlikely. That said, hash rate does follow the price, and if price is growing that dramatically, perhaps supply would appear. But, with even a “small fab” costing in the order of $12 billion and taking eight years to complete, it’s hard to see hash rate growing more than 1% per epoch regardless of price, certainly not for another two or three years. Perhaps in a “scenario three” situation where price rises so dramatically that chip producers will be compelled to prioritize the Bitcoin mining industry due to the sheer profitability, we may start to see extraordinary average fortnightly growth. I will assume that by the end of 2021, all hash power evicted from China will be back online in another jurisdiction, and the year will end at a hash rate of 150 exahashes per second (EH/s). Assuming price growth scenarios one and two (0% and 25% per year, respectively), 1% growth rate in hash power every difficulty epoch is assumed. This gives us around 550 EH/s in 2026, and 2,000 EH/s in 2031. In the case of scenario three panning out, we will assume 1% until 2024, and 1.5% from 2024 onwards on account of the resolution of the chip shortage and prioritization of the Bitcoin mining industry due to very high profitability. This gives us around 700 EH/s in 2026, and 4,900 EH/s in 2031. The key takeaway is that no matter how far price outstrips hash rate due to production limitations, the gap will be bridged through a natural increase in ASIC prices. In perfect competition, CAPEX + OPEX will always tend to the price of a bitcoin — no matter what. On a separate note, a slow growth in hash power has the added benefit of equipment becoming obsolete much slower, extending equipment life, hence reducing environmental load. Energy Mix And Price Assumptions No need to make too many guesses on this one, the International Energy Agency (IEA) already has its 2030 targets in place in its “2020 Energy Outlook.” Here are the highlights: “Primary energy demand in the Net Zero Emissions by 2050 (NZE2050) scenario falls by 17% between 2019 and 2030. Coal demand falls by almost 60% over this period to a level last seen in the 1970s. Emissions from the power sector decline by around 60%. Worldwide annual solar PV additions expand from 110 GW in 2019 to nearly 500 GW in 2030, while virtually no subcritical and supercritical coal plants without carbon capture (CCUS) are still operating in 2030. The share of renewables in global electricity supply rises from 27% in 2019 to 60% in 2030, and nuclear power generates just over 10%, while the share provided by coal plants without CCUS falls sharply from 37% in 2019 to 6% in 2030.” IEA also says that, “Electricity meets 21% of global final energy consumption by 2030.” So, we know that primary energy demand in 2019 was 173,340 terawatt hours (TWh), and that this will decrease by 17% by 2030 to 143,870 TWh, and electricity makes up 21% of this, or, 30,210 TWh. The world’s grid intensity was 463 grams (g) of carbon dioxide equivalent per kilowatt hour (CO2e/kWh) in 2019, targeting around 240 g CO2e/kWh by 2030 in line with the IEA sustainable development scenario. Accounting for all of the above, we will assume a linear improvement from 2019 to 2030 to extrapolate the world average energy mix and intensity in 2026 and 2031, as shown in the tables below. Since Bitcoin is currently cleaner than the world average grid (418 g versus 463g CO2e/kWh), and considering the China ban, Bitcoin is currently very easily over 50% total renewables, also known as “The Elon Threshold.” I predict that due to offset emissions from prolific use of flared methane to mine bitcoin, as well as Bitcoin being agile enough to move to the cheapest (i.e., cleanest) energy sources — whether it is a remote oil field or volcano — the carbon intensity of Bitcoin in 2026 will be 100g CO2e/kWh, and by 2031 it will be zero (or negative). Energy Use And Emissions We now have the following two scenarios, the associated assumptions and their final energy use and emissions. Current data is based on cbeci.org, as at June 23, 2021, per the screenshot shown below. From the above, it would appear that Bitcoin’s emissions peaked a few months ago, and thankfully, with the banning of Bitcoin mining in China, has commenced its aggressive march down to zero emissions. It is expected that in the worst case, emissions from Bitcoin in five years will be less than a third of its emissions today, and in 10 years, Bitcoin will emit nothing at all. While this may seem counter-intuitive, when all of the data is aggregated and assessed with logic and textbook business and economic frameworks, it can be easily seen that Bitcoin poses almost no threat to the environment. Indeed, in the best case, Bitcoin will actively heal the environment through offsetting of flared methane and by holding the key to an abundant, clean energy future. I look forward to revisiting this prediction in 2026! This is a guest post by Hass McCook. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.