Chapter 15 - Mining for Bitcoin

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Chapter 15

Mining for Bitcoin

In the early days of Bitcoin, as it was just rolling out amongst a very small number of people, each could have their own desktop computer be used as a node in the network that achieves the blockchain and arrives at the proof of work for rewarding the bitcoin.  In those early days, bitcoin had no real value. The value was always in the potential of what it would become.  In fact, some that mined bitcoin actually freely gave back some bitcoin to others, both strangers, and people they knew which if held today would be worth many millions of dollars.  Its funny today looking back at people tossing bitcoin back around at one another as perhaps someone throws a rock into a pond to see how many skips one can achieve.  

One of the more important correspondences by Satoshi Nakamoto occurred on January 8, 2009, at 19:27:40 UTC.  It was the announcement for the release of the EXE program which one could use their PC to mine the bitcoin.  Most people, even some unfamiliar with the Open-source C++ code, could operate the Windows based program.  Satoshi’s email reads:

Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority.

Satoshi Nakamoto provides the link to a downloadable Windows EXE program and writes:

- Unpack the files into a directory

- Run BITCOIN.EXE

- It automatically connects to other nodes

There is more detail in the email sent out by Satoshi Nakamoto as to its functionality and noting he made the difficulty of mining the coin “ ridiculously easy to start with, so for a little while in the beginning a typical PC will be able to generate coins in just a few hours.  “

As noted elsewhere in this writing, Bitcoin starts off very easy to mine to get people interested in it as well as keep it rolling along in a compounding way much like a snowball on a slope.  As momentum in mined Bitcoin would build so would its utility, use and store of value.  

Today, mining includes giant farms of computers costing many millions of dollars and cooled by the latest technology with incredibly high energy demands all to achieve the same outcome a personal computer did in 2009.  

Those early adopters and people willing to have a node on their personal computer were greatly rewarded.  At the initial rewarding, 50 Bitcoins would be rewarded on a node owner for completing the blockchain and proof of work.  The rewards have a predetermined halving formula embedded into the code as follows:

2009 = 50 Bitcoins

2012 = 25 Bitcoins

2016 = 12.5 Bitcoins

2020 = 6.25 Bitcoins

2024 = 3.125 Bitcoins(April 19, 2024)

2028 = 1.5635 Bitcoins (expected around Mid-April 2028)

And so on until the 21,000,000 coins dispersed over time is reached.

The dates of future halving can generally be approximated, however, due to the method of mining changing difficulty and allocating out coins is a function of both time duration of the blockchain completion (every 10 minutes) and the computing power and nodes on the network, it’s not possible to calculate the exact moment for the halving in advance. As the estimated date and time approaches, refinements in the halving moment can occur and become increasingly more accurate until it is finally determined with precision.

The point of all this, for purposes of this book is that Satoshi Nakamoto made it relatively easy at the onset for people to participate in the mining of bitcoin as well as participate in being a node on the network.  He had answered some questions early on in the public forum correspondence to assure people could get rolling with it and mine bitcoin. As well as trouble shoot some aspects of it and assure, he had worked out all the kinks.  His early communications are a record of some of this guidance and his sincere desire that this be self-fulfilling with no need for oversight or intervention just like a snowball building upon itself down a slope.