Day 2 Update
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Updated: 2025-05-16 13:45 PDT
Published: 2025-05-15
This project investigates whether Bitcoin’s fee market can eventually sustain the network on its own, without the need for a block
subsidy. As the subsidy halves roughly every four years and will one day drop to zero, this study asks the central question:
Will miners still be economically incentivized to secure Bitcoin?
Hypothesis
If Bitcoin is to remain secure in the long term, transaction fees must rise to match or exceed the operating costs of mining. This study
assumes that the block subsidy will disappear, and we aim to track whether the fee market is keeping pace with rising difficulty and energy
costs.
Methods
- Crawl all Bitcoin blocks using a full Bitcoin Core node
- Record
block_height, timestamp, total_fee_sats, and difficulty
- Compute fee per unit of difficulty:
fees / difficulty
- Later, estimate miner cost per block based on assumed:
- Hardware efficiency (e.g., 30 J/TH)
- Electricity cost (e.g., $0.05 per kWh)
- BTC/USD price (placeholder or historical)
- Visualize trends with Python using rolling averages
Findings (In Progress)
- Early blocks (2009–2010) show no fee activity
- Difficulty remains flat at 1.0 for an extended period
- Fee market begins to awaken slowly around 2011
- We are currently approaching block 210,000 (the first halving)
Sources and Assumptions
- Difficulty, timestamp, fees: From Bitcoin Core RPC (
getblock, getrawtransaction)
- Miner energy efficiency: Estimated 30 J/TH (based on Antminer S19 class ASICs)
- Electricity rate: $0.05 USD per kWh (global estimate)
- BTC/USD exchange rate: $40,000 (placeholder — to be replaced with historical pricing)
- All output stored in CSVs with matching Python scripts for analysis