Bitcoin mining; Big little lies

Hiding Bitcoin weaknesses is not a solution.

Somayyeh Gholami
The Startup
Published in
14 min readFeb 26, 2019


Ten years ago, Bitcoin’s proof-of-work mechanism was a great idea for a pilot project and the launch of the first decentralized network as well. But this approach for long-term life must be corrected, and for years, the amount of power consumed by a country with ten million populations, cannot be dedicated for bitcoin transactions only. It’s extreme selfishness and not fair. It is necessary to first try to rectify the bitcoin network Instead of finding strange and fancy utilization for blockchain technology.

The authors of the article are Ms. Somayyeh Gholami and Mr. Mehran Kazeminia and it is written in Persian and English versions in February 2019.

Persian Article

In the early days of Bitcoin’s emergence, the “Bitcoin Mining” term and also choosing the name “Miner” for block producer, were used to describe the new and slightly complex concept of the blockchain. But we know that the activities of block producers into blockchains and mining operations in the real mines are not similar, and in many ways, they’re totally different. But this naive and funny naming cause Bitcoin miners’ huge power consumption seems to be normal. In addition, the blockchain experts did not take an effective step to clarify the subject, and sometimes with their complex and mysterious speech, even pretended that the environmental problems of Bitcoin mining are normal and unavoidable.

Unfortunately, a little lie in terms of naming caused to not pay enough attention to the cost-benefit analysis (CBA) of the subject. All the stuff, photos, articles, etc illustrated the blockchain technology as complex and costly as real mining. Public opinion was amazed at the complexity of the subject, and perhaps because of this wrong comparison, the scientific and rational requirement for extremely high energy consumption was less questioned. Today more than 50 terawatts (1 TWh = 3 600 000 000 000 000 J) electricity is consumed to record bitcoin transactions! It means the amount of electricity used to record the entire Bitcoin’s ledger is equal to the annual power consumption of a country with ten million populations.

Many people mistakenly think that the extraordinary consumption of electricity is used to produce and mining Bitcoin, and such mining work is like a kind of industry that creates value added. But everyone should know that this energy consumption is just for determining the winner miner and the valid block by the method of proof-of-work, and Bitcoin is not produced and mined by using such electricity, and basically, the power consumption for creating millions of Bitcoins is negligible.

The study, which was carried out in October 2018 on global climate change, showed that in less than three decades, Bitcoin mining could increase global temperatures more than 2 degrees Celsius. Digiconomist has also published an article which estimated the power consumption of Bitcoin’s transaction is approximately two hundred thousand times (200K) more than the Visa card’s transaction. These figures are really shocking and it should be noted that if we wanted to record and store all of the world’s Bitcoin transactions in a centralized network, certainly a local medium bank would be enough to do that.

Global Warming

In the following, we move forward the discussion in form of a few simple questions and answers, because we want to give an explicit answer to some misunderstandings of the blockchain technology, and to examine the problems of the bitcoin mining, even though these questions have been repeatedly asked But unfortunately, often the answers of the blockchain technology experts has not been transparent. For example, they’ve beaten around the bush and talk about the similarity between the mining from the ground and Bitcoin mining, and simple and accurate answers have not been given to the people’s questions.

For what purpose Bitcoin miners do math calculations? And how much electricity is consumed for such calculations?

These mathematical calculations simultaneously specify two things: first, every ten minutes, it determines the winner miner by a completely random mechanism, and secondly, by performing these calculations, everyone is sure that the block made by the winner is valid and there is no flaw in transaction’s data or no tampering with it. Almost all power consumed by miners is for doing this mathematical calculus.

After the winner identifies, he will add the valid block (which also contains the transaction of receiving his own remuneration) to the end of the chain and it’s done. Miners have a chance to win every ten minutes and always need to consume a lot of electricity. Miners’ power consumption across the globe has been estimated by different people. Unfortunately, their report shows that the electricity consumed by the miners is very high and more than 50 terawatts a year.

What problems are solved by such math calculations that need enormous power consumption?

No issue or problem is solved by these mathematical calculations, nor is there any creativity in the work. In this calculation, only large quantities of random numbers, one by one are added (combined) to a particular type of math functions (hash of block contents) and the result of this combination is calculated for each random number. The winner miner is the one who can find the right random number faster than the rest. An appropriate random number is a number that in combination with the mathematical function produces a certain result.

It is clear that these calculations do not help mathematics or solve a real problem, but is simply planned for the random selection of the winner miner. Meanwhile, the spectacular power consumption of this method is due to the fact that every time (every ten minutes) a large number of miners (or Mining Pools) independently try countless random numbers for winning.

How a Bitcoin Transaction Works

Is the winner miner paid with Bitcoin as the miner’s fee? And how much electricity is consumed during this payment?

Yes, some Bitcoin is paid. In that way, when the winner miner is identified, he adds a special transfer request to the same block and transfers a certain number of bitcoins (as a reward) plus the transaction fees of the same block to its wallets. The sum of these Bitcoins is considered to be the winner fee and although there are no senders, the other nodes considered it as a valid transfer. Certainly, power consumption for this work is negligible, and stunning power consumption is only to win.

For example, Block #559286

For example, you might be familiar with smart contracts. Tokens are produced by smart contract, and you just need to set the number of your tokens while you’re coding. The total cost and power consumed to produce one million tokens and one billion tokens do not differ, and very little electricity is consumed. The same is true for producing cryptocurrency like Bitcoin. For example, the total number of Bitcoins is twenty-one million, but the total number of Ether is 100 million. This is just a choice in the time of coding.

However, the use of the ‘’Mining’’ word is not proportional to reality, and extraordinary consumption of electricity is not used to produce or extraction Bitcoin but to select the winner miner. Meanwhile, this selection is completely planned randomly.

In fact, from what source fees paid to miners? In other words, how the cost of consuming electricity for mining Bitcoin, is financed?

As previously stated, before the total number of bitcoins reaches its maximum which is twenty-one million, every ten minutes the specified amount of Bitcoin as a reward is added to the wallet of winner miner(This amount is currently 12.5 Bitcoin that will be almost half every four years). Obviously, the increase of the number of tradable Bitcoins has the inflation impact on the Bitcoin market, and practically, all Bitcoin holders pay this part of the winner miners’fee somehow. In addition, a small portion of the winner miners’ fees is the total transactions’ fee of the same block which was paid by the sender of each transaction at the time of the transaction. The total transactions’ fee for a block is usually less than one Bitcoin.

Block Reward History

If from the first day, the total miners’ fees were paid directly in the form of transactions’ fee by the senders of Bitcoin and there was no winner miner reward, then the inefficiency of the proof-of-work mechanism and the dramatic waste of electric power soon were well-manifested. Unfortunately, most of the miners’ fees and their electricity costs are provided by the winner miner’s reward and its impact is only showed by inflation, which is not very tangible for most people.

Meanwhile, the miners’ reward decreases over time and will be cut in half every four years. However, the Bitcoin price is not constant and the future cannot be foreseen at all. It can only be said that by using this method in a hundred twenty years, the number of tradable bitcoins reaches exactly twenty-one million, and the miners’ reward is also stopped.

As a result, one hundred twenty years later, the only network income is transactions’ fees, but perhaps at that time, there would be no proof-of-work mechanism at all!

What is the capacity and size of each Bitcoin block? How many Bitcoin blocks are in network and what is its volume up to today?

Bitcoin block’s size is nearly a megabyte, and at the time of writing this article, number 559286 was mined. At the same time, the total size of the Blockchain Bitcoin is approximately two hundred GB bytes. This volume of data is not large at all, and usually, all people have more than two hundred gigabytes of free space on their laptop’s hard drive.

Bitcoin Blockchain Size

The fact is that the power consumption of a country with ten million populations is used to record and store Bitcoin’s transactions. However, the total volume of this data is less than a typical laptop’s hard drive, and in terms of environmental protection, the power consumption is not in proportion to the work. It seems, however, that the blockchain concept’s novelty and the use of the term “Mining” have been a cover for the disproportion.

Blocks mined on 20/01/2019

If you look carefully at the size of the blocks in a month, you find that sometimes the block size is very small and only a very small amount of transactions is placed in a block. However, the winner miner’s award for such blocks does not differ from the rest of the blocks. At the moment, the award is 12.5 Bitcoin. Sometimes it causes miners’ award for recording transactions’ data even be really higher than the total amount of entire transactions. For example, the miner has rewarded over $ 40,000 to record a couple of transactions, but the total amount of transactions of a block is less than $ 20,000.

This diversity and complexity of topics, and especially the term “Mining,” makes people lose sight of enormous energy wasting. On the other hand, miners always have to pay a lot of money on their electricity bills and other costs. But in any case, this waste of energy should not be hidden, and it’s necessary to find a good way to save energy in the shortest possible time, without harming Bitcoin and blockchain technology.

What are the advantages and disadvantages of Bitcoin transactions in comparison with Visa card’s transactions?

The advantage of the Bitcoin’s transactions is that transactions are carried out without the presence of a financial institute or bank. While Blockchain technology let people, who do not know and trust each other, trust entirely the transactions information and distributed ledger of Bitcoin network, and there is no need for an intermediary financial institution to do this.

In contrast, as you have already seen, the main disadvantages of Bitcoin’s transactions are astronomical energy consuming. Several reports have been published in this area. For example, in one report, electricity consumption of a Bitcoin’s transaction, twenty thousand times more than the power consumption of a Visa card ‘s transaction is calculated. But a newer report stated that the power consumption of Bitcoin’s transaction is two hundred thousand times more than the power consumption of a visa card’s transaction. Unfortunately, even the smaller figure is extremely high.

In other words, Bitcoin’s transactions, in addition to serious environmental damage, are much more expensive than conventional transactions. But users pay directly only a small portion of the miners’ fees as a transaction’s fee. A large portion of their remuneration is paid as a miner’s award. These new Bitcoins have an inflationary impact on the Bitcoin market, and indirectly all the Bitcoin holders are paying for it, but practically, no one pays attention to this part of the cost.

Another disadvantage of bitcoin’s transactions is the low scalability of the Bitcoin network. The simple explanation is that the speed and number of bitcoin’s transactions per second are much less than the usual visa card’s transactions.

The solution is not to hide Bitcoin weaknesses

If you simultaneously search Blockchain and energy saving words on Google or Medium, you’ll find dozens of research and articles on how to save energy by Blockchain technology! Of course, some articles are creative, and some are fancy and inapplicable. While the main weakness and inefficiency of the blockchain technology, and especially the bitcoin network, is their unusual power consumption.

Also, smart contract developers propose the smart contract for the most sophisticated social projects and processes, such as insurance types, types of voting and referendum, banks, and so on to somehow eliminate human factors and Reduce costs, mistakes, and corruption. Certainly, their suggestions are almost executive and creative. But unfortunately, in order to record the transactions of such smart contracts, human factors in the form of miners and block producers have a lot of cost and power consumption.

The comparison of transaction

Indeed, Blockchains after bitcoin, like Ethereum and EOS, fortunately, do not use the proof-of-work mechanism like Bitcoin, but also use the proof-of-stake mechanism as well as the delegated proof-of-stake mechanism. In such mechanisms, the total operating costs of block producers and their energy consumption are significantly lower than the proof-of-work mechanism. But it should be noted that they are still not comparable to normal visa card’s transactions. In the meantime, Bitcoin continues in a primary way.

Proof of Work vs Proof of Stake

Everyone knows Bitcoin is the world’s first blockchain network and is considered to be the most popular cryptocurrency in the world. Bitcoin’s creator wanted no bank or financial institution has the responsibility of the ledger and transaction registration in its own peer to peer network. For this reason, it suggested the use of a proof-of-work mechanism to avoid flaw, fraud, and double spending, which at the time was a new and innovative method, but now it has to be reformed and rushed to do so.

What has to done?

One — First of all, we need to know and believe that Blockchain technology and especially Bitcoin have not yet been able to solve their main problems. Ten years ago, the POW(Proof-of-work)mechanism for a pilot project and the launch of the first decentralized network was a great idea. But this method for long life needs to be corrected, and it cannot dedicate the power consumption of a country with ten million populations for Bitcoin’s transactions for years. It’s extreme selfishness and not fair. The people around the world are involved with many environmental problems, and most of them are poor. Indeed, it is necessary to first try to rectify the Bitcoin network Instead of finding strange and fancy utilization for blockchain technology.

Two — One of the suggestions is to launch a parallel network with bitcoin that has less power consumption. This new network, for example, can use the delegated proof-of-stake mechanism like the EOS network. Gradually, we must ask all Bitcoin owners to get the equivalent of their Bitcoin from the new cryptocurrency, and their initial Bitcoin should be burnt simultaneously. It should be noted that this issue is different from the fork.

Recently, similar work is done by the EOS network, and the achievements of the EOS community can be a good experience. When BlackOne wanted to launch its EOS ICO, there was still no cryptocurrency nor EOS network. The company decided to temporarily use an Ethereum ERC 20 token to fundraise. After the EOS cryptocurrency and EOS network were set up, the ERC 20 tokens that were held by anyone were burned, and at the same time, the amount of EOS cryptocurrency equivalent of the burned sums was paid to the same person.

Three — Another suggestion is the reduction of miners’ activities from 24 to16 hours per day. Certainly, there must be no block producing twice a day while each break last for four hours around the world, and recording transactions wait for the official start of the miners’ activities in the world. In such a way, more than 30% of the power will be saved, which is really a big number. The closing hours of miners can be at times when the least number of transactions occur.

Four — Our main proposition is to replace miners and block producers with some sort of smart contract. This method is the achievement of our small collection ‘’’’ and we call it Smart Blockchain. The power consumption and the scalability of Smart Blockchain’s transactions will be similar to Visa Card’s transactions. Fortunately, by using this method, huge power consumption, and Bitcoin problems and all other cryptocurrencies will be solved at the same time.

What is “Smart Blockchain”?

For more than a year, in decentralized networks, we are trying to get flawless and accurate data of transactions at the moment of transactions. Because in this case, there is no need to generate many different alternatives from a block like a Bitcoin and Ethereum network, and then miners by consuming enormous power, spending cost and using a variety of proof mechanisms choose the valid one.

Fortunately, we’ve got good results from our efforts; the most tangible and easiest way to use the concept of smart contracts is to produce blocks. To learn more about the features of Smart Blockchains and more information on this topic, you can read these two articles:

Meanwhile, we have published two other articles in this connection, in which the concept of the Smart Blockchain is considered from different perspectives. The following links are associated with these two articles:

Smart Blockchain

The present situation of Bitcoins cannot always continue, and Smart Blockchain is a good way to rescue Bitcoin and transform Blockchain technology. This method can solve all the problems and limitations of Bitcoin at once, while Bitcoin will still not be dependent on any financial institution and bank. We finish this article here and look forward to your feedback.

February 26, 2019
Somayyeh Gholami
Mehran Kazeminia


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Somayyeh Gholami
The Startup

Founder of Soliset, Tech researcher, Computer software engineer, Web & Blockchain developer, passionate about technology and art