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= Miners use highly specialized computers designed to run an algorithm that attempts to solve a cryptographic puzzle in order to add a new block on the blockchain. By design, a bitcoin block is created once every ten minutes.
= The computing power required to solve the cryptographic puzzle is high and expensive; bitcoin mining consumes an estimated $1.3bn worth of electricity annually!—equivalent to Ireland’s annual electricity consumption.
" In order to incentivize mining, the first miner to complete a block is rewarded 12.5 bitcoins. The global supply of bitcoins is capped at 21mil (currently ~16.5m) and follows a predetermined growth rate—the miners’ rewards halve every four years.
" Given ~1-1.5m mining units globally, the likelihood of any one miner solving a block is low. Many miners join “mining pools,” which are cooperatives which share block rewards proportionate to contributed mining power.
— Mining pools are highly concentrated; the top four pools represent over 50% of total mining power.
(1) Bitcoin Energy Consumption Index: https://digiconomist.net/bitcoin-energy-consumption
8 Source: Investment Strategy Group, http://cryptocurrencyfacts.com/how-does-cryptocurrency-work-2/.
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