How Long Does It Take To Mine One Bitcoin in 2021
Mining Bitcoin takes patience, power, and in some instances, community. A multitude of mining operations exist to discover new Bitcoins, but first, we must define the actual process of mining a Bitcoin so we can see how long it takes. Spoiler alert, the answer varies based on the mining operation itself and the volume of miners involved in the mining process on a global level.
Bitcoin is structured in a decentralized manner, meaning no central bank, institution, or corporation owns and controls it. The nodes that house the blockchain ledgers and validate on-chain transactions are located worldwide and run by independent, small or industrial-sized mining operations. No one controls Bitcoin, and the decentralized finance aspect is a major appeal to the community and now to institutional investors looking to diversify their capital assets.
Let's first take a macro viewpoint and define the mining process. Bitcoins are mined in a multitude of ways, ranging from solo miners running a specialized mining rig in their basement to industrial-scale mining operations found in Iceland or China.
Proof of Work
Bitcoin uses a Proof of Work (PoW) consensus algorithm to secure the network. A collective of miners spread throughout the globe discover blocks and add transactions that are pending to the blocks, making them immutable. Miners are the ones who secure the network and receive rewards for their work.
Proof of Work requires a fair amount of computing power and energy consumption. This reality has stirred up many controversies recently. While the conversation is not an easy one, we must understand the technology so we can place the energy consumption of Bitcoin into context.
If you are new to cryptocurrencies and concerned about the environmental impacts of investing in Bitcoin, understanding proof of work is vital to grasping the actual energy issues behind Bitcoin mining. Understanding the energy debate behind Bitcoin usage will also help you avoid misleading narratives from mainstream media outlets that simply do not understand the technology they are reporting on or have an external agenda to downplay Bitcoin's viability.
Many other cryptocurrencies, known as altcoins, utilize a different method of block confirmation called Proof of Stake. This method is less controversial because it does not use the same scale of computational power to confirm transactions on the blockchain.
Bitcoin Block Rewards
Regardless of size, the miners are competing against one another to confirm a block on the Bitcoin blockchain, thus securing the network itself. The blockchain acts as a ledger that logs all the transactions occurring globally using Bitcoin.
When a miner discovers a block, they receive a Bitcoin block reward. The reward changes over time by a pre-programmed methodology called halving. The halving occurs every four years and reduces the miners' reward by cutting it in half. The last halving occurred in 2020, taking the current Bitcoin block reward down to 6.25 BTC for each block that a miner is able to confirm.
Only a single miner from the globally distributed network can discover a new block. Since so many mining operations are all competing to discover the same blocks, both individual miners and industrial-scale mining farms, the solo miner has a distinct disadvantage. When Bitcoin first launched, solo miners used basic computers to mine hundreds or thousands of Bitcoin in very small timeframes.
As of 2021, If the miner successfully confirms a block, they will earn 6.25 Bitcoins. More than one million ASIC specialized mining devices are in operation, all working to secure the Bitcoin network. Only one ASIC can win a block reward at a time, and a new block is produced every 10 minutes. The odds of a small mining operation or a solo miner winning a block is fairly small, which is why mining pools are popular for individual miners.
Hash Rate and Mining Difficulty
One miner, a solo miner, has a more challenging time breaking through all the miners fighting to confirm one block. This difficulty fluctuates based on the hash rate. The hash rate is a measure of how many hashes your mining rig or computer can calculate, usually in a one-second time frame. The network hash rate measures the combined available power for the entire blockchain. The network hash rate represents the total of all the computing power provided to a blockchain from users globally. The higher the hash rate, the more difficult it is to mine. The network hash rate fluctuates as miners join or leave the network.
Hashing is a mathematical operation that takes in a quantity of data and produces a fixed output. In order to discover blocks in the Bitcoin protocol, computers work furiously to generate a number of hashes until one of them has a small enough value to confirm the block. The winner broadcasts the hash to the network of Bitcoin nodes for verification of truth. If the hash is legitimate to the other nodes, the miner who broadcasted the winning block wins the newly generated Bitcoin.
Solo Miners & Mining Pools
Most solo miners join mining pools, allowing them to function as a collective and mine Bitcoins together as one large group. When the pool solves a block, they divide the Bitcoin rewards up based on the individual miner's hash rate or computing power. Essentially, their rewards are based upon the computational contribution of the individual miner.
A solo miner working outside of a mining pool could take months or years to break through and solve a block to receive the 6.25 BTC reward. While a solo miner is waiting to win a block reward, the miner incurs the costs of running their mining operation non-stop. Energy costs and equipment upkeep can easily consume a solo miner's resources long before winning a block reward.
But a mining pool has the collective computational power to confirm blocks regularly, sometimes daily. The pool rewards are then divided among the pool participants. While the rewards are smaller than a solo mining reward, they are more consistent over time, making mining pools a more effective way for solo miners to earn Bitcoin from their efforts.
The bigger the mining operation, the more computational power it possesses to increase the likelihood of confirming blocks consistently. A mining operation with twenty thousand mining devices has the potential to win several blocks a day.
No Clear Timeframe
As you can see, mining Bitcoin varies dramatically depending upon the miner's resources and their collective computing power. A new Bitcoin block surfaces every ten minutes, and Bitcoin rewards are distributed as these new blocks are discovered by miners. A large mining operation can capitalize on its computing power and break through the network hash rate faster and more consistently. The mining advantage goes to the larger operations, which can also absorb the cost of running large mining systems over time.
Larger mining operations also contain the resources to generate power in cleaner and more cost-effective manners, thus increasing their profits for each Bitcoin block they win. As more mining operations explore cleaner energy sources to increase their Bitcoin profits, the entire sustainable energy marketplace moves forward as well.
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