Bitcoin still maintains a significant share of PoW mining rewards, at a level that exceeds 80%.
The rewards received by Bitcoin miners constitute an important part of the salaries paid through the main proof-of-work (PoW) chains. This information was provided by Yassinue Elmandjra, a cryptocurrency analyst from ARK Invest.
For instance, last January 9th, Bitcoin miners were paid more than USD 15 million in this cryptocurrency as an incentive to mine blocks and secure the network.
Meanwhile, the total rewards paid through Ethereum (ETH) and other major PoW cryptocurrencies including Zcash (ZEC), Litecoin (LTC), Ethereum Classic (ETC), Bitcoin Cash (BCH) and Bitcoin SV (BSV) were only a little more than 18 million dollars.
Essentially, Bitcoin miners were responsible for almost 83% of the total mining rewards paid through the main PoW blockchains.
Since mid-2017, the wage share of Bitcoin miners has increased by 250%, whilst that of Ether, the second-largest cryptocurrency, has decreased significantly.
Definition of PoW
The proof of work is a consensus algorithm for blockchain networks where miners find blocks by solving cryptographically difficult puzzles.
This contrasts with the proof of stake (PoS), where the validators enclose the respective cryptocurrency to claim their participation in the ecosystem.
Bitcoin as the Strongest Cryptocurrency
The fact that Bitcoin miners are receiving significantly higher salaries than their counterparts is not surprising. That occurs because it is the strongest cryptocurrency driven by the PoW. It also has the greatest network effect and the longest history, according to Muneeb Ali, CEO of Blockstack PBC.
Additionally, the security of the Bitcoin network, represented by its hash rate, has increased considerably over the years. The above has allowed building trust in the blockchain and has established a loop of positive security feedback and network effect.
At the time of writing this article, the Bitcoin hash rate is approximately 111,000,000 TH/s (or 111 EH/s).
Bitcoin’s participation in PoW mining could grow further in the future as Ether and other blockchains begin to switch to PoS, which is a less intensive consensus mechanism regarding energy.
Ether is expected to complete the transition from PoW to PoS in 2022. Steve Tsou, global CEO of RRMine predicts that its network will be better once ETH 2.0 (post-transition) shows its true value in the global market.
Another factor that could affect miners’ income and influence the participation of Bitcoin in PoW mining is the halving that is expected this 2020.
Rewards received for each block extracted in the Bitcoin blockchain will be reduced from 12.5 BTC to 6.25 BTC in May. Mining costs will double after the halving, which could displace weak miners, thus causing changes between supply and demand.
Tsou said that miners’ revenues will increase if the halving creates a supply deficit, pushing prices above mining costs. This could also boost Bitcoin’s participation in PoW mining even more since the increase in profitability could attract miners from other chains.
The executive considers that the most important thing is that miners control the cost, which fully determines whether they can benefit from it or not.
By Alexander Salazar