Halving, mining, Satoshi and other matters / Půlení, těžba, Satoshi a jiné záležitosti

As of July 20, 2023, we have completed the third BTC halving. The first halving took place on 28 November 2012, the second halving on 18 July 2016 and the third halving on 11 May 2020.
The fourth halving is scheduled for 2024, approximately 200 days from now.
For many Bitcoiners, the halving is a significant milestone and many speculators have their eyes on this event.

When the blockchain with the bitcoin protocol was launched in 2009, early bitcoiners could mine bitcoins with standard computer equipment and there was no need for specialized hardware as there is today. Using the first multi-core processors, early bitcoin miners could mine on their home computer or laptop and earn 50 BTC per block found.
In 2010, the code was modified to allow mining on a GPU (graphics card). GPU mining allowed bitcoin miners to mine more efficiently, allowing them to find more blocks and earn more BTC. Because whoever possesses more computing power has a better chance of mining a block, getting rewards.
The year 2010 was also another milestone regarding BTC mining. The first Bitcoin.cz mining pool was created, later renamed Slush Pool, created by Marek " Slush " Palatinus. The pool was able to combine the power of individual mining facilities.
By 2011, specialized FGPA chips had already started to be produced. These chips have already marked a noticeable end to domestic mining and the transition to industrial mining using ASIC miners.

And here's where I think there's a bit of a problem. While the network is still secured and appears to be decentralized, the more power is devoted to finding the block, the more it hits a ceiling as the midterms approach where the whole thing can collapse. This problem is called the security budget.
The problem with the security budget is that the amount of BTC that is issued for mining a block decreases with each half BTC. This means that there is less incentive for miners to invest in mining BTC. If Bitcoin's security budget is reduced too low, it could lead to the blockchain being more vulnerable to attacks.

There are several possible solutions to the security budget problem:

• Increase transaction fees: transaction fees are another source of revenue for miners. If transaction fees were to increase, they could help offset lower revenue from BTC mining.
• Introducing additional fees: the Bitcoin protocol could be modified to allow miners to charge additional fees for their services. These fees could be used to fund the security budget.
• Developing new technologies for mining BTC: New technologies for mining BTC could be more energy efficient and cheaper. This could help reduce the cost of BTC mining and keep the security budget at an acceptable level.

I might add one more to this list of solutions. And that is to get mining back to the people. Satoshi Nakamoto (whoever he was) probably didn't count on this technological development regarding mining - Pools, ASICs . Maybe he had the idea that everyone would mine at home on some small, not very energy intensive machine. Mining would be really decentralized, a real lottery. Not a profit chase.
That possibility is, unfortunately, almost unthinkable.

Massive industrial mining of BTC with a strong regard for profit is similar to what its basic idea wants to dispense with. And one of those ideas is the Cantillon effect - the uneven influence of monetary policies on the economy. Governments are the first to try to get their hands on new money to influence events. Miners are trying to get their hands on the latest and greatest BTC. And profit is their primary goal more than network security and equal distribution.
But that's up for debate. It remains to be seen if Security Budget is an (un)solvable issue for the future.

And here, in a roundabout way, I come to another, related topic that might be for another post. But while I'm at it....

I've previously seen an interesting open source miner based on a microprocessor and ESP32 on the internet. Basically an Arduino module with wi-fi and a dual core processor.
While visiting Chaincamp, I saw this device with my own eyes and thought I could build this toy too.
I write toy because the mining power of this thing is negligible, almost vanishingly so, and real-world use for mining is unrealistic.
But if we went back in time before the innovations with GPUs and ASICs....

I searched the internet and discovered the recently created Nerdminer project.

https://github.com/BitMaker-hub/NerdMiner_v2

Nerdminer can run on different boards, but the most common is Lilygo S3 which we bought on Aliexpress . This board has a power consumption of less than 2 W, which means you can power it all year round for less than 5 EUR.
Thanks to the latest firmware, the total hashing power of this device is a maximum of 55 kh/s

The mining capacity of this device is therefore terribly ridiculous.
Imagine giving every person on planet Earth 1 Nerdminer: that would be equivalent to the hashing power of just three S19s. The Bitcoin network is currently powered by the equivalent of 2.5 million of these machines (Antminer S19s).

So why bother with this and spend money unnecessarily?
With Nerdminer you can benefit with little upfront and operational costs. It will allow you to deal with the real and basic dynamics of mining: running hardware, managing pools, interacting with mining logs, etc. This equipment can allow you to practically learn something that would otherwise be extremely difficult.

I purchased the Lilygo S3 module from Aliexpress for 780 CZK / 32 EUR. The Lilygo S3 module is a great choice for educational and development purposes. It is easy to use and offers a wide range of features that can be used to experiment and learn about IoT.

The Lilygo S3 module can be used to create industrial devices such as sensors, controllers and automation systems, among others. The devices can be used to monitor and control various processes.

I used the instructions from GitHub to upload the firmware to the device. And following the instructions I went to the recommended page.

https://github.com/BitMaker-hub/NerdMiner_v2
https://bitmaker-hub.github.io/diyflasher/

After uploading the firmware, the device activated the wifi interface to which it was possible to connect and select other configuration options.

So I connected to Nerdminer and selected the network settings, that is, username and password. The mining pool has already been set up, but it is possible to choose from different pools (preferably following the GitHub instructions).

Then just insert the BTC address, save and start mining.

More than a real mining machine, however, it is primarily a toy. If we move away from the current development full of mining farms and pools, this could be the key to full decentralization and a possible solution to the Security Budget.

Still, this device can be useful in some ways. It can be switched to several screens. So you can see e.g. BTC price, time, current fees, current block number, hashrate... Good toy.

You can check the performance and operation of your equipment on the pool.