The 39 BTC per day are the direct fees. The fees and the mining rewards per block are different though. The total mining reward per day depends on the number of blocks mined (currently we're at about 160ish per day rather than the nominal 144 per day) so if we say the number is actually 160 then the total mining reward would be 4039 BTC per day. The majority of the mining reward comes from the block subsidy of 25 BTC per block. Obviously in July this drops to 12.5 BTC per block.

The intent was always that as the block reward continued to halve then a fee market would arise that would compensate the miners with fees instead of compensating them with the block reward. The problem is that after 7+ years the fees per block aren't anywhere close to the block rewards.

In theory if there was a shortage of useful capacity in the blocks then we'd actually see fees increase as users paid more to ensure that their transactions got mined rather than someone else's. The fact that this isn't happening raises questions about how many of the current transactions are really things that their senders actually cared about because even with the stress tests, etc., there doesn't appear to have been a major need for people with transactions that they do care about to have had to increase their fees to get things mined quickly.

The 28-day moving average is the red dashed line and is running at about $8 at the end of the chart, while the 28-day moving average for the number of transactions (just updated the graphic in the article to show that) is running at 200k, so that's $8x200k = $1,600,000. Here's the graph of mining rewards per day (I didn't end up using it when I wrote the article): http://hashingit.com/images/articles/20160203/rewards-per-day-usd.png

Oops- forgot to add a label this. I just updated the graphic. The value is in USD.

When the hash rate is increasing between difficulty retargets we see blocks being solved more quickly. Instead of, say, 10 minutes on average we see blocks taking 9 minutes, so this means there's more capacity available to handle transactions. This reduces the pressure on transactions and therefore means that it's much more likely that low or zero fee transactions will get included in blocks by block makers (because they don't have anything better to do with the block space).

My latest thoughts on the Bitcoin network. This time I was inspired to look at what's actually been happening with transaction fees in light of the various arguments about the impact of block capacity scarcity.

http://hashingit.com/analysis/47-bitcoin-tx-fees

The 16nm ASICs are clearly going to affect the balance of the network as they're much more power efficient, but so too will the block reward halving that's coming in July (looks like it will stay in July although there's an outside chance it might move into late June). At a stroke the reward halving cuts the funds available to miners unless the BTC price doubles.

Totally - the network expands to absorb all potential mining rewards in real-world terms. When I first started looking at the mining network a couple of years ago I was struck by the correlation, but it wasn't until a few months later I worked out why. I should probably re-visit that original article, but it pretty-accurately captured the slowdown in hash rate growth that happened in later 2014 and 2015:

http://hashingit.com/analysis/24-megawatts-of-mining

Lately I've also been publishing the source code for the simulations so I'll do the same when I get chance to update this one.

Continuing my investigations into the nature of the Bitcoin mining network. Here's an overview of how hash rate changes have affected the strength of the Bitcoin blockchain over the last 6 years:

http://hashingit.com/analysis/46-behold-exahash

I updated the "Bitcoin Traffic Bulletin" article that I wrote in November 2014, with improvements to some of the stats, new stats as of yesterday and some revised commentary in light of the block size debate. Hope it's of interest!

http://hashingit.com/analysis/44-bitcoin-traffic-bulletin-redux

The simulator sources used in the article are available on github, with the link at the bottom of the article.

Let's try -2.51 to -2.75 this time 

Thanks!

I'll take 2.51 to 2.75 this time please 

Many thanks for for running this!

It doesn't make sense on any device though. Always costs more to run than it's worth, plus requires consumers to do setup work to utilise what it does. I don't mind doing setup for my phone because I gain a lot from doing it, but what I don't get is why having BTC mining in my TV or a games console is interesting? What problem related to those devices does it solve? The funds aren't going to be large enough to do interesting micropayments. Even at 50 GH/s there's not enough BTC mined in a year to pay for a game or more than one or two TV episodes. Gets dramatically worse next year when the block reward drops to 12.5 BTC.

Unless there's going to be major adoption by users then the OEMs won't install the capability in their hardware because it costs them money (silicon, board space, software development and maintenance, customer service calls, retailer margin). There's a lot of commercial risk and highly questionable upside?

The whole mobile phone idea is just a really bad joke. Let's say something like an iPhone 6 uses about 10 Wh of power to charge it (0.01 kWh): http://www.telegraph.co.uk/technology/apple/iphone/11128043/How-much-power-is-used-to-charge-an-iPhone-6.html.

If we assume that 21 can make a 50 GH/s ASIC that runs at 0.1 J/GH (way way better than anything available right now) then that 10 Wh of power will last less than 2 hours while the ASIC is active (much less in fact because the Wi-Fi or LTE modems and either the main CPU or an NPU have to be active too to connect to anything).

Given that the single biggest complaint almost every phone user has about their phone is battery life does anyone really thing that people are going to be happy with phones that need charging every 90 minutes? Let's say they throttle back to a duty-cycle that's only 25% (6 hours when the phone is charging overnight) then the phone has a whopping 12.5 GH/s of hashing; that's 1 28 millionth of the current hash rate so to supply 50% of the network hashrate will require 28M mobile phones (at the current hash rate).

Of course this is a zero-sum problem so those 28M phone users will between them mine half of the 25 BTC per block (going down to 12.5 BTC next year). That's 44.6 satoshis each per block (call it 45 with the tx fee). If the indications about reward sharing are correct then 21.co get 75%, or 33.75 of those 45 satoshis so our phone owner has 11.25 satoshis per block or 1620 satoshis per day. After a year they've got 591k satoshis, so that's 5.91 mBTC ($1.37 at current prices).

At an average of 12.5 GH/s and 0.1 J/GH then they used 24 * 12.5 * 0.1 = 30 Wh of power per day, or 10.95 kWh per year (assuming a perfect charger; not that they exist - the numbers will be higher). If the video's quoted price of $0.12 per kWh is correct (retail electricity pricing) then mining that $1.37 costs at best $1.31 but also costs the battery on the phone draining, the phone getting hotter, etc. The heat thing is not to be dismissed because phone enclosures aren't designed to dump sustained heat this way.

Basically they'll have to persuade 28M phone owners that they should spend their electricity mining for 21.co, getting a worse phone experience and having to pay more for the phone in the process (to cover the extra ASIC and the necessary heat dissipation). Now if they persuade 56M phone owners then 21.co's mining operation is huge; it now nets them 2/3 of all of the bitcoins but our phone users now only get 3.94 mBTC ($0.91) but their costs stay the same.

When the block reward halves then the numbers get much worse from the consumer's perspective. Now they have the same costs but only half of their previous reward.

Oh and here's the irony: the claim is that this is to enable "decentralisation" right? Well guess what, our 28M phone miners are delivering all of the blocks to 21.co's mining pool; that's 50% of the network. Can we please see the necessary freak out along the lines of when GHash.io didn't actually quite get to 50% of the network last year? Our 56M phone miners would give 21.co 66% of the network.

Remind me again how all of this is a good idea?

Looks like the good guesses are gone :-) I'll go with +0.76 to 1.0!

I've been making a working assumption of about 2% for quite a while now. Of course it's difficult to test this theory over the short term because of variance issues (the variance is larger than the trend). The only thing that would change this would be a major shift in the BTC price again.

Seems to be Tuesday in CA, so this time I'll try +2.51 to +2.75 

Many thanks for running this!

Ah the joys of statistical noise! I'm no better even after calculating all of the statistical variance numbers for a network seeing steady changes (and that's not what we see of course ). Still, it's fun guessing!

Miners will typically not all shut down at the same time so this will be somewhat gradual, probably over a number of difficulty windows. It's true that the difficulty retargeting will try to get things back to 10 minutes but if the hash rate is higher at the start of the difficulty period and steadily reduces then the retargeting algorithm will leave the difficulty too high still and we'll still see longer pauses between blocks.

Right now is that the network is still slowly expanding so we've not really seen any of these effects come into play.

I'll go with -0.51 to -0.75 this time 

I'll go with +0.26 to +0.50 this time thanks :-)

I'm still puzzling about the run of low block finding rates at the end of the last difficulty change. Not sure if this was just unusual luck or something offline but will be interesting to see over the next few days.