Here’s our definitive answer (with examples).
Bitcoin with an uppercase “B” is associated with the protocol and payment network. Use the capitalised form when talking about the ecosystem. If you want to get grammatical, think of uppercase “B” as a proper noun.
Most writers will use the lowercase “b” version to describe units of BTC and when referring to it as a form of currency.
For example, “This article is dedicated to discussing the evolution of Bitcoin and how it has been, and is being, mined, as well as the electrical consumption implications with creating new bitcoins via bitcoin mining.”
To this day, the inventor of Bitcoin remains a mystery although Australian Craig Wright claims that he is Satoshi Nakamoto. For those of you who don’t know, Satoshi Nakamoto is the name used by the pseudonymous person or persons who developed Bitcoin.
In the past we have already explained what Bitcoin and blockchain are so we won’t go over again.
BTC Price (And Who Prices The Price)
Right now, this is the price you can pay for bitcoin on our exchange.
If you shop around, however, you will notice that there are multiple buy/sell prices for bitcoin available on different exchanges. At the time of writing, the three largest exchanges based on bitcoin trading volume within the past 24-hours are BitMEX (Seychelles), Bybit (Singapore), and OKEx (Malta).
As you can see from the above visual, the top 3 cryptocurrency exchanges nearly accounted for the entire day’s bitcoin trading volume.
Within 24-hours, hundreds of price fluctuations to bitcoin take place and this volatility is driven by demand and supply. This demand and supply is how the market determines a price for bitcoin at any given time.
Cryptocurrency exchanges help facilitate the buying and selling of bitcoin and add their service fee on top of the market price of bitcoin.
For most of its first infancy, bitcoin had a price of less than a dollar. This is because no one was interested in trading bitcoin for US dollars.
The digital currency first hit a price of USD 1,000 on Mt. Gox in late November 27, 2014. Its run, however, was short-lived.
It wasn’t until February 2013 that bitcoin began gathering mainstream interest although according to this source, FOMO (fear of missing out) drove a lot of demand for bitcoin in 2016 through to 2017 (refer to the above graphic).
What Happened To Bitcoin In 2015?
The lowest price of BTC in 2015 was January 14, 2015(USD 177.28/AUD 217.22).
The highest price of BTC in 2015 was December 15, 2015 with a peak price of USD 465.50/AUD 646.58.
What Happened To Bitcoin In 2016?
The lowest price of BTC in 2015 (USD 358.77/AUD 522.94) occurred on January 15, 2016.
The highest price of BTC in 2015 (USD 978.01/AUD 1,361.68) occurred on December 28, 2016.
In June 2016, BTC experienced a mid-year rally, peaking at USD 768.24.
What Happened To Bitcoin In 2017?
The price of Bitcoin was its lowest (USD 775.98/AUD 1,042.84) January 11, 2017.
The price of Bitcoin reached its peak (USD 19,343.04/AUD 25,304.56) on December 16, 2017.
What Happened To Bitcoin In 2018?
The price of Bitcoin was its highest at the beginning of the year (USD 17,135.84/AUD 21,795.07) on January 6, 2018.
Throughout the year, the BTC price continued on a downward trend, finally bottoming out on December 15, 2018 at USD 3,703.80/AUD 5,119.39.
If you had bought and held BTC at its peak price in 2015, you would have still been ahead had you sold your BTC at the lowest BTC price in 2018.
What Happened To Bitcoin In 2019?
At the time of writing, there are still 2 more weeks until Christmas.
As the chart above shows, BTC price rallied towards the end of April 2019 and reached its peak on June 26, 2019 with a price of USD 12,907.14/AUD 8,472.70; a far cry from the lowest point on February 6, 2019 (USD 3,383.67/AUD 4,761.16).
With that said, the year is yet to end and BTC does appear to be on a downward trajectory once again.
As we approach the next bitcoin halving event, punters continue to speculate what this may mean for bitcoin.
What Have Been The Biggest BTC Trading Days In History?
At the time of writing, the biggest day in bitcoin training was on Friday 8, December 2017. This coincides with an 8 percent drop in the price of bitcoin. A total volume of AU $5 billion of bitcoin was bought and sold on this day.
|#||Date||Bitcoin Trading Volume (AUD)|
|1||Friday, 8 December 2017||$ 5,055,591,563.90|
|2||Tuesday, 6 February 2018||$ 3,947,318,653.82|
|3||Wednesday, 29 November 2017||$ 3,972,979,092.39|
|4||Tuesday, 16 January 2018||$ 3,473,952,462.56|
|5||Wednesday, 20 December 2017||$ 3,585,231,813.73|
|6||Monday, 11 December 2017||$ 3,305,940,721.39|
|7||Saturday, 23 December 2017||$ 2,549,348,322.39|
|8||Tuesday, 26 December 2017||$ 2,261,086,848.59|
|9||Sunday, 17 December 2017||$ 2,138,140,367.20|
|10||Wednesday, 10 January 2018||$ 2,038,940,652.40|
Figure 8: ten of the highest bitcoin trading volume days expressed in AUD (data via Blockchain, historical FX calculated via Fxtop).
Using historical AUD/USD exchange rate data, the above table shows the 10 largest bitcoin trading volume days. As you can see, all of the dates are within a 120-day period of each other. That is, from late November 2017 through to early February 2018.
Bitcoin in Australia
Unlike fiat currency that is printed and distributed by a government, no single country or government owns Bitcoin. This is what makes Bitcoin a decentralised digital currency.
The map provided by Law Library of Congress (US) shows the legal status of cryptocurrencies across the world. As you can see, digital currencies such as bitcoin are legal to trade, mine, and to hold as an investment asset in Australia.
In the eyes of the Australian central bank (Reserve Bank of Australia), bitcoin and other digital currencies have no legislated or intrinsic value. It is not a form of money despite its ability to be used to make payments and as such, bitcoin is not legal tender.
Due to its decentralised nature, the Australian Tax Office (ATO) does not classify Bitcoin as an official currency for taxation purposes. Specifically, as per its guidance paper published online here, the ATO views BTC as neither money nor foreign currency and as a result is not subject to GST.
In Australia, Bitcoin may be used for both personal and business transactions. It is seen by the ATO as an asset for tax purposes and there may be tax consequences upon selling it or using it to buy goods or services.
Generally speaking, there are no tax consequences when buy and use Bitcoin to purchase goods or services as it is seen as a personal use asset.
More commonly, Bitcoin is purchased as an investment vehicle and capital gain tax will apply in these cases.
Australian businesses are free to accept Bitcoin as payment for goods or services. In doing so, the Australian dollar equivalent value received must be recorded as income. Similarly, the business must issue an invoice with the Australian dollar equivalent value. Normal GST rules apply.
In terms of trading Bitcoin, Australians are free to buy and sell BTC through any exchange they want.
AUSTRAC has the authority to regulate all cryptocurrency exchanges in Australia.
Australian digital currency exchange providers must apply to register with AUSTRAC, renew their registration every three years, and have an Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) program specifying how the exchange complies with AML/CTF.
Bitcoin Mining Is Not Profitable In Australia
The profitability of crypto mining comes down to the following factors:
- The cost of hardware
- Block difficulty
- Power cost
Power in Australia is more expensive than in many other parts of the world. South Australia and New South Wales have the highest mean household electricity prices (37.62c/kWh and 27.56c/kWh respectively). According to Canstar, the average electricity usage rates per kWh across Australia is more than 20 cents per kWh.
As unlocking Bitcoin blocks continues to gain difficulty, the financial reward halves every 210,000 blocks. Even if you could pick up cheaper second hand hardware, you will be competing against major players who have dedicated mining centres filled with ASIC miners. Factoring in their cheaper electricity costs, mining bitcoin as an individual in Australia is no longer feasible.
The Evolution of Bitcoin Mining
Another key feature of the cryptocurrency is that the only way that new Bitcoin is produced is via a complex process called “mining”.
Bitcoin mining is a process of completing complex calculations known as hashes.
Each hash has a chance of yielding Bitcoin.
Therefore, the more hashes a miner performs, the greater the probability of earning Bitcoin and, thus, making a profit.
Bitcoin mining like many other cryptocurrency mining is legal in Australia.
Each Bitcoin block is around 1 megabyte in size. Verifying this block is the easy part. Being the first miner to arrive at the right answer (known as proof of work) is what makes Bitcoin mining increasingly difficult.
What makes Bitcoin unique as a digital currency is that there can only be 21 million bitcoins in existence. At the time of writing, over 18 million Bitcoin have been mined. Once the remaining 3 million Bitcoin are mined, no further bitcoin can be introduced into circulation.
We can only speculate what will happen once this happens.
Bitcoin mining has evolved a lot since 2009.
In the early days of Bitcoin, mining was predominantly done via a computer’s CPU. The amount of computing power necessary was relatively low and only hobbyists and those with a personal interest in cryptocurrency were mining Bitcoin. This is because miners were rewarded 50 BTC per block they unlocked. Back in 2009, 50BTC had little to no monetary value.
According to this source, if you had a couple of decent-specced computers, you could have earned $5 per day.
Satoshi envisioned that Bitcoin would be mined on user’s CPUs. But once Bitcoin mining became mainstream, GPU mining quickly replaced CPUs. This was because GPUs are more efficient at executing repetitive instructions than CPUs. Expressed as numbers, a CPU core can execute 4 32-bit instructions per clock versus 3200 32-bit instructions per clock of a Radeon HD 5970 GPU. This difference of 800 is significant.
GPUs were so popular for cryptocurrency mining that from Q2 2017 there were reported stock shortages and price hikes. This wasn’t the first time GPU prices went up due to mining – the price of AMD Radeon cards were significantly inflated in 2013.
According to ZDNet, three million GPUs were purchased in 2017 alone ($776 million).
As the demand for efficiency mirrored that of Bitcoin block difficulty, FPGA and ASIC mining came onto the scene.
Bitcoin’s mining difficult adjusts after every 2,016 blocks, or roughly every 14 days. This is done to ensure the time to product a block remains around 10 minutes.
But how does Bitcoin difficult impact on a miner?
One such user on Stackexchange posed the following question.
“If I mine X Bitcoins per day and the difficulty increased by Y percent, how many coins will I get after this?”
A helpful member was able to provide an answer to the question.
Your profit relates to the amount of hashing power you contribute to the network. Since you rmining power is constant, your share of the total hashing power decreases relatively when the network’s hashing power increases. That is, we can deduce the following formula:
newProfit = currentProfit * currentDiff/newDiff
At a currentProfit of 1BTC/d and a 30% increase in difficulty, you get:
(1BTC/d)*100/(1–+30)= (1BTC/d)/1.3 = 0.76923077 BTC/d
That is, your profit decreases by approximately 23 percent.
In a 2012 research paper titled “A Performance And Energy Comparison Of FPGAs, GPUs, And Multicores For Sliding-Window Applications”, the authors found FPGAs can achieve speedup of up to 11x and 57x compared to GPUs and multicore CPUs respectively.
The following graphic representation taken from this 2016 whitepaper shows the significant processing power GPUs have compared to FPGAs. At the same time, the power efficiency of FPGAs are substantially higher than those of GPUs.
However, factoring in the cost of FPGAs into the equation, it becomes clear where price efficiencies lie per GigaFlop.
The popularity of FPGAs was short-lived as they were soon replaced by ASIC mining.
As seen in the below graph, early miners such as the Bitmain Antminer S3 had an efficiency of 0.77 J/Gh. Compare that with the Bitmain Antminer S17 Pro released in April 2019 with an efficiency of 0.04 J/Gh.
The lower the Joules per Gigahash (J/Gh), the more efficient a Bitcoin miner is.
The Bitmain Antminer S17 Pro has an estimated profitability of $2.41 per day whilst delivering a hashrate of 53Th/s according to this source.
Another anomaly Satoshi never foresaw was the emergence of mining pools. That is, instead of individual miners as per Satoshi’s single CPU and single vote design methodology, mining pools allow users to combine their hashrate.
At the time of writing, the largest mining pools are Poolin, F2Pool, BTC.com and AntPool. Combined, these four mining pools account for over half of hashrate distribution. A quick Google search of these mining pools will indicate that they are all based in China.
Bitcoin Mining’s Electrical Consumption
Estimates on electrical energy demand of Bitcoin mining varies.
According to coinshare, the estimated total electricity draw of the global Bitcoin mining industry is approximately 4.7GW. This was based on an assumption that the amount of energy required for hashing alone was approximately 4.3GW.
In 2014, O’Dwyer & Malone suggested in their paper ‘Bitcoin Mining and its Energy Footprint’’ that the total power used for Bitcoin mining is around 0.1-10GW.
Written testimony presented to the U.S. Senate Committee on Energy and Natural Resources by Associate Professor of Computer Science Arvind Narayanan in August 2018 claims Bitcoin mini accounts for approximately five gigawatts of electricity per day.
Another Bitcoin electricity consumption estimate by Marc Bevand is approximately 4.12-4.73 TWh/year.
Sixty percent of global Bitcoin mining occurs in China with Sichuan producing half of the global hashrate.
This is an interesting statistic given that cryptocurrency trading is illegal in China and initial coin offerings are banned. Yet, China has been the epicentre of global BTC mining than any other country.
In early 2019, Beijing seemed to crackdown on Bitcoin mining. It signalled its disapproval by recommending its local governments to phase out “virtual currency mining” in a draft version of the Catalog of Guiding Industry Restructuring. Originally slated to be eliminated, the final published version makes no reference to virtual currency mining.
Yunnan, Xinjiang and Inner Mongolia are other popular Bitcoin mining regions.
The southwestern provinces of China (e.g., Sichuan) are predominantly hydroelectricity powered. During wet season, electricity prices can fall as low as 2.5c/kWh. However, once the dry season returns, electricity prices rise, some mining operations will move to Xinjiang to take advantage of cheaper cheap cal and wind power.
Of the remaining 40 percent of miners, 35% of global hashrate production is evenly split between Washington, New York, British Columbia, Alberta, Quebec, Newfoundland and Labrador, Iceland, Norway, Sweden, Georgia and Iran. With the exception of Iran, the majority of these mining centres are hilly or mountainous regions traversed by powerful rivers.
One of the earliest recorded transactions that gave Bitcoin a real-world valuation came from an interesting forum post. On May 18, 2010, Lazlo proposed to trade 100,000 bitcoin in exchange for two large pizzas from Papa John’s (cash value of $25).
Four days later, the same user reported that his 100,000BTC had been successfully traded for pizza.
Almost ten years later, the Bitcoin paid for the two pizzas would have been worth approximately $800 million.