Bitcoin mining or how to understand the rabbit burrow rules

Introduction

Bitcoin, the cryptocurrency par excellence, has some special characteristics that justify the accelerated race to dominate the mining industry.

When Satoshi Nakamoto published the white paper on October 31, 2008, he laid out critical conditions for the future of the coin.

The most-significant characteristic that is intrinsic to Bitcoin is its scarcity. The supply would be limited to 21 million Bitcoins. The difficulty in mining BTC would increase and the reward would decrease steadily over time.

By imposing these conditions, Satoshi Nakamoto intended to emulate the processes of extracting scarce materials throughout history.

A brief history of commodity mining

History shows us that at the beginning of any type of exploitation, obtaining the reward is relatively straightforward. 

In the next stage, the low-hanging fruit is exhausted. Moreover, competition – triggered by the news of simple extraction – intensifies the race. The presence…