Mining and energy

What the work is for

A miner collects transactions, builds a candidate block, and hashes its header over and over with different nonce values until the result falls below the network target. There is no shortcut: hashing is the only way to find a valid header. That is exactly the property Bitcoin needs.

Because finding a block costs real electricity, rewriting history costs real electricity too. To replace the last six blocks you must redo their work faster than the rest of the network is extending the chain. The cost of lying scales with how far back you want to lie.

The reward for doing the work honestly is the block subsidy plus the fees in the block. Miners who produce invalid blocks earn nothing: every full node checks the rules and rejects them, so the electricity is simply lost.[1][2]

How difficulty keeps the clock

Every 2016 blocks, roughly two weeks, nodes compare how long those blocks actually took to how long they should have taken. If they came too fast, the target tightens; too slow, and it loosens. The change per retarget is capped at a factor of four in either direction.

This is why more mining does not produce more bitcoin. Extra hashrate makes blocks briefly faster, the retarget removes the gain, and the schedule continues. The supply curve is set by the subsidy rule, not by effort.[2][5]

Reading energy numbers honestly

Nobody can measure Bitcoin's electricity use directly. Estimates work backwards from hashrate and an assumed mix of hardware efficiency, which is why Cambridge publishes a lower bound, a best guess and an upper bound. Any single confident figure you see has hidden assumptions in it.

Two follow-up questions matter more than the headline number. First: where does the electricity come from? Miners chase the cheapest power, which is often stranded hydro, flared gas or grid surplus that has no other buyer at that moment. Second: compared to what? Household standby losses, aluminium smelting and data centres are all in the same order of magnitude, that comparison is context, not a verdict.

The honest summary: Bitcoin uses a material amount of electricity by design, the amount is an estimate with a wide band, and whether that is worth it is a value judgement about what a settlement network without a gatekeeper is worth to you. This page will not make that judgement for you.[23][24]

What happens as the subsidy shrinks

Miner income has two parts. The subsidy halves on a fixed schedule; fees do not. Over time, fees have to carry more of the security budget, which means blockspace demand matters for long-run mining revenue.

This is a genuine open question, not a solved one. Nobody knows what fee levels the market will settle at decades out. What is known is the rule: the subsidy schedule is enforced by every node, and no amount of hashrate changes it.[2][1]