7 months ago

Looming Bitcoin Halving: Securing the Future with Innovation

Dec 4, 2023

By: Sanjay Gupta, Head of Strategy & Business Development, Auradine Inc.

Bitcoin, the world’s first and most well-known cryptocurrency, relies on a decentralized network of miners to validate transactions and secure its blockchain. At the heart of this mining process are Application-Specific Integrated Circuits (ASICs) that perform SHA-256-based proof-of-work hashing, which are computational calculations required to validate new blocks. Bitcoin miners compete with each other to be the first to solve the ‘hash puzzle’ and rely on block rewards paid in bitcoins per successful block validation besides transaction fees as their source of income.

The Looming Halving of Bitcoin

Bitcoin operates on a fixed supply schedule, with new coins in the form of block rewards issued to miners for successfully validating new blocks. Currently, there are 6.25 new bitcoins are issued for each new block successfully added to the chain approximately every ten minutes. As part of the Bitcoin protocol to gradually reduce the supply of new coins, every four years, this block reward undergoes a “halving,” which reduces the number of new bitcoins for each new block by half. This helps to control supply-driven inflation, with the maximum cumulative circulation of bitcoins capped at 21 million. The next Bitcoin halving is expected to occur in April 2024 and will reduce the rewards to 3.125 new bitcoins per new block.

The next Bitcoin halving is expected to occur in April 2024 and will reduce the rewards to 3.125 new bitcoins per block mining.

Bitcoin Block Reward

Bitcoins 50 25 12.5 6.25 3.125 1.5625
Year 2009-12 2012-16 2016-20 2020-24 2024-28 2028-32

Innovation in Mining Energy Efficiency and Bitcoin 3.0 critical

The early days of hobbyists and speculators driving ‘Bitcoin 1.0’ evolved to industrial scale ‘Bitcoin 2.0’ mining that has further evolved to its current form of ‘Bitcoin 3.0’ as a responsible partner of the energy ecosystem. Following the halving, miners will need to double the amount of computational effort for the same number of bitcoins that they would previously earn at the same global hash rate level. With no change made this will significantly increase the cost and reduce profitability of bitcoin mining by requiring twice the energy to generate the same amount of bitcoins. In this looming post-halving scenario, bitcoin mining efficiency becomes critical to operate profitably.

In this era, innovations in Bitcoin mining energy efficiency, ability to operate in harsh environments close to renewable energy sources and rapid demand response to balance electrical grids is critical.

Eras of Bitcoin

Technology Innovations for Success Post-halving

Bitcoin miners will need to modify their operations to be profitable with a lower block reward. Being a successful miner in the bitcoin post-halving era will require embracing critical innovations driving energy efficiency and performance. This will include:

  • Systems based on latest ASIC chip technologies for maximizing energy efficiency: Bitcoin mining efficiency is measured in energy consumed for each hashing computation typically measured in Joules/Terahash. Improving efficiency requires ASIC that can operate successfully in low voltages and have an ultra-dense transistor design. Transistors are the computational building blocks in ASICs and technology innovations have driven shrinking ‘process nodes’ measured in terms of nanometers (1nm = 10−9m). As the process node size reduces, it allows for integration of more transistors on a chip, resulting in increased computational power and energy efficiency.
  • Ability to mine successfully in harsh environmental conditions: Bitcoin mining will need to continue to tap into renewable energy sources and utilize stranded energy e.g., methane gas that would otherwise be flared. These sources are often in extreme climate conditions with temperatures as high as 122°F (50°C) with extreme fluctuations. Bitcoin mining need to be capable of operating successfully in these conditions for extended periods of time that requires innovations in mining hardware system engineering.
  • Mining with capabilities for rapid energy demand response: Bitcoin mining plays a key role in stabilizing energy grids by balancing supply and demand with variable large loads. Ercot in a December, 2022 report highlighted the importance of variable large loads from bitcoin mining . Successfully achieving this requires innovation in rapid demand response with the ability of mining systems to flexibly ramp down or up their power consumption in seconds based on the needs of the grid.

We believe that the winners in the bitcoin mining industry post-halving will be the ones that drive and rapidly adopt these technological innovations. At Auradine, our mission is to stay at the forefront of innovation to drive a secure and successful Bitcoin blockchain.

About Auradine

Auradine is a pioneer in web infrastructure solutions including blockchain, privacy and AI. The company is building breakthrough software, hardware and cloud solutions to enable a highly scalable, sustainable and secure infrastructure. Auradine was founded in 2022 by a team of seasoned entrepreneurs and technologists with deep expertise and proven track record in security, SaaS, semiconductors, and systems. The company is headquartered in Silicon Valley, California. For more information, visit www.auradine.com.

Media Contact:

Sanjay Gupta

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