A Close-up Look at the Bitcoin Mining Industry and the Unexpected Risk of Centralization It Poses for Bitcoin.

The striking parallel with the Gold Rush will become clear.

By the time you've read this newsletter, you'll have understood that at the root of Bitcoin's success lies an algorithm. Bitcoin's consensus algorithm is called Proof-of-Work (PoW). It is the miners of the Bitcoin world who make the Bitcoin network more secure, making it more resistant to potential attacks such as the takeover of 51% of the hash rate:

---

---

The computing power made available to the network by Bitcoin Miners is now so great that some studies have even shown that such an attack is no longer a threat to the Bitcoin network:

---

---

To harness this kind of computing power, Bitcoin Miners need to put mining ASICs on the network. With PoW, it's quite simple: the more computational power you have per second, the more likely you are to find the next block to add to the Bitcoin Blockchain.

The reason Bitcoin Miners are so keen to find the next block is to collect the reward allocated to the next block. Since Bitcoin's fourth Having, this reward has dropped to 3.125 BTC per block successfully added. Competition between Bitcoin Miners has become even fiercer. Natural selection will take place, and some will not survive.

That's the way it's always been in the Bitcoin world. And don't forget that this trend is irreversible since a Halving takes place every 210,000 blocks issued. Nobody can stop this process.

Bitcoin mining has thus become a veritable industry. Some lucky solo miners always manage to find the next block, but this kind of success story is very rare. The days when you could mine Bitcoin on your personal computer and earn substantial income are over.

The crypto mining industry in its broadest sense, i.e. beyond Bitcoin, was worth $1.92 billion in 2022. Some analysts predict that it will be worth $7 billion by 2032: