Progress Recap: Mining & Energy

Twenty days into Part 7. Here’s what’s been covered.

Mining is the process of finding a valid hash for a new block — billions of guesses per second until one meets the target. The winning miner earns the block reward and fees. No shortcut exists. The work is the security.

Proof of work makes cheating expensive. Producing fraudulent blocks requires real energy. Honest mining is profitable. The incentives align without anyone enforcing them.

Energy use is structural not incidental. The energy expenditure is the security deposit that makes Bitcoin’s history immutable. More hash rate means higher cost to attack — which is why security has increased every year.

The difficulty adjustment recalibrates every two weeks to maintain the ten-minute block target regardless of how much mining power joins or leaves. China banned mining in 2021 and hash rate dropped 50%. The adjustment absorbed it completely.

Nodes validate every block against Bitcoin’s rules. No specialised hardware required. Miners produce history. Nodes decide what history is valid. The 2017 block size attempt failed because the node network didn’t adopt it — demonstrating that miners don’t control Bitcoin’s rules.

The mempool is the waiting room — transactions queue before being included in blocks. Fees determine priority. Congestion raises fees. Quiet periods bring them near zero.

Transaction fees go entirely to miners — nothing to any company or institution. Fee size is based on data size, not transaction value. Long-term, fees must sustain miner compensation after block rewards reach zero.

Confirmations grow more final with every subsequent block. Six confirmations — about one hour — is considered practically irreversible.

For the book that covers where all of this fits into the bigger monetary picture — revisited now with 250 days of context behind it:

Question Everything You Know About Money — amzn.to/4lDc4Wp

The final ten days of Part 7 cover the supply mechanics — the UTXO model, what happens after the last Bitcoin is mined, and the governance fight that nearly split Bitcoin permanently in two.

Tomorrow: the UTXO model — how Bitcoin actually tracks who owns what.

— The Daily Bit