Episode 4: Bitcoin: History, Mining, and the Future
Episode 4: Bitcoin: History, Mining, and the Future*In Episode 3, we saw how Bitcoin uses blockchain technology: Transactions are collected, verified, and stored in blocks. The nonce is then changed repeatedly in search of a hash that meets the required condition.*Now we look at Bitcoin itself: Where did it come from? Why would anyone participate in mining? How much computing power and energy does the network require? And what happens when no new Bitcoin is created?
The Beginning
On October 31, 2008, a nine-page document titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published.
The author was identified as Satoshi Nakamoto.
To this day, nobody knows who is behind this name. It may have been one person or a group of people.
On January 3, 2009, the Bitcoin blockchain began with its genesis block. A few days later, the first transfer of Bitcoin between two people took place: Satoshi Nakamoto sent ten Bitcoin to programmer Hal Finney.
Bitcoin did not belong to Satoshi Nakamoto, however. Its source code was published and could be run, examined, and developed further by other people. There was no central server and no single operator controlling the network.
Satoshi Nakamoto later withdrew from the project. Bitcoin continued to operate without its creator.
What Is One Bitcoin Worth Today?
Bitcoin does not have a fixed price. Its price is determined by supply and demand on trading platforms and can change within minutes.
On August 30, 2026, one Bitcoin (BTC) was worth approximately 78,000 US dollars. This figure is therefore only a snapshot. Current Bitcoin price
Transaction volume also fluctuates. At the end of August 2026, the Bitcoin blockchain confirmed approximately 600,000 to 800,000 transactions per day. Bitcoin worth several billion US dollars was transferred each day. Current network data
These figures describe only transactions stored directly in the blockchain. Payments made through additional systems such as the Lightning Network are not fully included.
Why Would Anyone Participate in Mining?
In Episode 3, we looked at mining from the perspective of the blockchain: A suitable nonce must be found for every new block.
But why would miners use their equipment and electricity to do this?
Anyone who finds a valid block may include a special transaction that assigns the specified reward to them.
The miner cannot choose the amount. It is determined by the Bitcoin rules and verified by every node.
Reward for one block
New Bitcoin 3.125 BTC
Transaction fees Variable*At a Bitcoin price of approximately 78,000 US dollars, the 3.125 newly created Bitcoin alone are worth around 244,000 US dollars.That sounds like an enormous profit. However, one single computer does not find a block every ten minutes. A very large number of specialized computers compete with one another around the world. They consume large amounts of electricity and usually find nothing.Many operators therefore combine their computing power in a mining pool. If the pool finds a block, the reward is distributed among its participants according to the computing power they contributed.**The approximately 244,000 US dollars are therefore the revenue from one successfully found block — not automatically the profit of one operator. Electricity, equipment, cooling, and operating costs must still be paid.*The newly created Bitcoin is called the block subsidy. It is supplemented by the fees paid by the transactions included in the block.
Only the combination of these activities fully explains mining:
Collect transactions
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Verify transactions
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Search for a suitable nonce
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Publish a valid block
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Receive the rewardMining therefore does not simply mean creating new Bitcoin. It means calculating new blocks and thereby continuing the blockchain.
New Bitcoin is currently part of the reward. It is not the actual purpose of mining.
How Many Bitcoin Can Exist?
The number of new Bitcoin created per block is defined by the Bitcoin rules.
The block subsidy initially amounted to 50 Bitcoin. It is cut in half after every 210,000 blocks. This happens approximately every four years and is called the halving.
2009 50 BTC per block
2012 25 BTC per block
2016 12.5 BTC per block
2020 6.25 BTC per block
2024 3.125 BTC per blockThese repeated halvings cause the total amount created to approach a fixed limit: Slightly fewer than 21 million Bitcoin can exist.
More than 20 million of them have already been created.
The block subsidy continues to become smaller but will not effectively reach zero until around the year 2140. The final Bitcoin is therefore not created in one last major discovery. The newly created amount becomes progressively smaller over many decades.
How Much Work Does Mining Require?
In our simplified example, the hash had to begin with 00. Only a small proportion of all possible hashes met this condition.
The condition in Bitcoin is far more difficult. At the end of August 2026, only about one out of every
540,000,000,000,000,000,000,000 hashesmet the required condition on average.
That is approximately 540 sextillion attempts.
Every attempt consists of the same steps:
Insert nonce
Calculate hash
Check conditionIf the hash does not meet the condition, the nonce is changed and the next hash is calculated.
A suitable hash may be found by chance on the very first attempt. It may also take more than 540 sextillion attempts. The figure describes only the average across a very large number of successfully found blocks.
The difficulty of the current condition is described by Bitcoin’s difficulty. The higher the difficulty, the smaller the proportion of hashes that meet the condition — and the more attempts are required on average.
The logical sequence is:
More difficult condition
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Fewer hashes meet it
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More attempts on average
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Higher difficultyIn our simplified example, the hash had to begin with 00.
Bitcoin’s actual rule is not “The hash must begin with a certain number of zeros.” Instead, the hash, interpreted as a number, must be smaller than a specified target value.
This value is called the mining target, or simply the target. How difficult it is to reach this target is described by the mining difficulty.
The principle remains the same:
Block data and nonce
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Calculate hash
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Does the hash meet the target?
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No: Change nonce and calculate again
Yes: Publish blockAll computers participating in Bitcoin mining currently perform a combined total of approximately one quintillion hash calculations per second.
Despite the enormous difficulty, this allows the complete network to find a valid block approximately every ten minutes on average. Current hashrate and difficulty
Why Does It Remain Close to Ten Minutes?
When more computers participate in mining, suitable hashes are initially found more quickly. When computers are switched off, the search takes longer.
Bitcoin therefore adjusts the difficulty after every 2,016 blocks. This happens approximately every two weeks.
If the previous blocks were found too quickly, the condition becomes more difficult. If they were found too slowly, it becomes easier.
More computing power
↓
Blocks are found more quickly
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Difficulty increases
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Back to approximately 10 minutes per blockThis prevents the speed of the blockchain from depending permanently on the number of computers participating in mining.
Why Does Bitcoin Require So Much Energy?
A single hash calculation requires very little energy. Bitcoin mining, however, performs an unimaginable number of hash calculations every second.
Specialized devices operate around the clock to perform these calculations. The computers require electricity and produce heat. Cooling systems and other technical equipment also consume energy.
The total energy requirement cannot be measured precisely because the equipment is distributed across many countries and operators. Studies from Cambridge estimate annual electricity consumption at approximately 140 to 180 terawatt-hours, depending on the calculation method. That is roughly equivalent to Poland’s annual electricity consumption.
This is an estimate, not a direct meter reading. The actual consumption depends on factors including the equipment being used, the total computing power, and electricity prices. Cambridge Bitcoin Electricity Consumption Index
This effort is not an unintended side effect. It is part of the Proof-of-Work security model.
Creating a valid block is intended to be expensive. Verifying the same block remains easy.
A node does not have to test trillions of nonces itself. It uses the nonce included in the block, calculates the hash once, and checks whether it meets the target.
Does Every Transaction Consume That Much Energy?
The energy consumption of mining cannot meaningfully be divided by the number of transactions.
The computers search for a valid block regardless of whether that block contains only a few transactions or many. One additional payment therefore does not automatically cause a corresponding number of additional mining devices to be switched on.
The energy is used to create and secure the blocks. It is not directly determined by the number of transactions.
What Happens After the Last Bitcoin?
Mining does not end when no new Bitcoin is created.
Only the first part of the reward disappears:
Reward today
New Bitcoin 3.125 BTC
Transaction fees VariableReward in the future
New Bitcoin 0 BTC
Transaction fees VariableAnyone who finds a block will then receive only the fees from the transactions included in it.
The blockchain can therefore continue without the creation of new Bitcoin. The crucial question is whether transaction fees will be sufficient to finance enough computing power in the future.
Nobody can answer this with certainty today. Bitcoin relies on network usage and the demand for limited space inside its blocks to generate sufficient fees.
What About Small Payments?
A small payment made directly through the Bitcoin blockchain can become impractical if the fee is too high in relation to the amount being sent.
The Lightning Network was developed in part to address this problem.
Two participants can open a payment channel with a normal Bitcoin transaction. A very large number of small payments can then take place inside that channel without each one being written into its own Bitcoin block.
Only when the channel is closed is the final combined result recorded in the blockchain.
Open channel Bitcoin transaction
Many small payments Outside the blockchain
Close channel Bitcoin transactionLightning makes small and fast payments possible without permanently storing every individual payment in the Bitcoin blockchain.
The individual Lightning payments do not pay miners directly. Miners receive fees only from the transactions used to open, close, or settle a disputed channel.
Small payments can therefore help keep Bitcoin usable as a payment system. The long-term financing of mining must still come from fees paid for the limited space in the actual blockchain.
What Makes Bitcoin Special?
Bitcoin is not operated by a company. There is no central database, no board of directors, and no single computer whose shutdown would end the system.
Instead, several mechanisms work together:
Blockchain Connects the blocks
Nodes Verify the rules
Proof of Work Makes blocks expensive to create
Mining Continues the chain
Difficulty Regulates the computational effort
Rewards Finance mining
Limited supply Controls the creation of new BTCBitcoin is therefore more than a digital currency. It is a system in which many independent participants can reach a common, verifiable state without having to trust a central authority.
We have deliberately simplified one crucial question:
How does the network know that a transaction was really authorized by Anna?
Bitcoin uses digital signatures for this purpose. Episode 5 explains how they work.
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