Bitcoin fundamentals remain unchanged despite the significant events in 2022

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The year 2022 marked the start of a new cryp­to win­ter, with major cryp­to com­pa­nies col­laps­ing and dig­i­tal cur­ren­cy prices plum­met­ing, includ­ing Bitcoin. 

In addi­tion, inter­est rate increas­es and gen­er­al eco­nom­ic neg­a­tiv­i­ty are caus­ing investors to worry.

The fun­da­men­tals of Bit­coin remain strong despite all of these. Let’s take a look at some of the Bit­coin met­rics for the year 2022:

Bitcoin Circulating Supply

The cir­cu­lat­ing sup­ply of Bit­coin cur­rent­ly stands at 19,257,175 – 91.7% of the capped max­i­mum sup­ply of 21 mil­lion coins.  Now, there are 1,742,825 left to be mined before the lim­it of 21 mil­lion bit­coins is reached.

An aver­age of one bit­coin block is cre­at­ed every 10 min­utes, so Bitcoin’s sup­ply is increas­ing approx­i­mate­ly every 10 minutes.

Change in Bit­coin block time over one year (Source: BitInfoCharts)

How­ev­er, despite a severe mar­ket down­turn, includ­ing min­er capit­u­la­tion and forced liq­ui­da­tion, defi plat­form hacks, Bit­coin has large­ly main­tained con­sis­tent 10-minute block times IN 2022.

Bitcoin miner’s block reward

Two com­po­nents con­sti­tute bit­coin block rewards: new­ly cre­at­ed coins and trans­ac­tion fees. When they suc­cess­ful­ly val­i­date blocks on the net­work, the reward is giv­en to miners. 

The num­ber of new­ly gen­er­at­ed coins is reg­u­lat­ed by a halv­ing event that occurs rough­ly every four years. The Bit­coin halv­ing event reduces the sup­ply of new bit­coins by half and aims to ensure that all 21 mil­lion bit­coins have been mined.

Despite mov­ing all their BTC to dif­fer­ent address­es, the new­ly gen­er­at­ed Bit­coin cur­rent­ly stands at 900/day this halv­ing, and the reward for each block is $6.3 BTC.

Change in miner's block rewards over the last years (Source: Bitcoin Visuals0
Change in miner’s block rewards over the last years (Source: Bit­coin Visuals0

While block rewards are sta­ble and pre­dictable, trans­ac­tion fees can fluc­tu­ate depend­ing on mul­ti­ple fac­tors, such as net­work activ­i­ty and trans­ac­tion size. 

Bitcoin’s Aver­age Trans­ac­tion Fee was $0.834 on Dec.31, a decrease from last year’s high of 2.829 – a change of 70.5%.

Change in transaction fees over the last year (Source: ycharts)
Change in trans­ac­tion fees over the last year (Source: ycharts)

This fall is pri­mar­i­ly due to increas­ing net­work dif­fi­cul­ty, heavy com­pu­ta­tion­al demand, and poor mar­ket performance. 

Block height

The block height stood at 573.296k as of Decem­ber 31. The blocks cre­at­ed per day remained con­stant despite the miner’s rev­enue touch­ing new lows. 

Growth of block height and blocks created per day (Source: Bitcoin Visuals)
Growth of block height and blocks cre­at­ed per day (Source: Bit­coin Visuals)

Every blockchain con­sists of a series of sequen­tial blocks, with the first block referred to as the gen­e­sis block. The gen­e­sis block is con­sid­ered to be in block height zero. As a gen­er­al rule, the blockchain’s total height equals the height of the most recent block.

As the block height con­tin­ues, Bit­coin still has more than 99% uptime, cur­rent­ly sit­ting at 99.987%

Bitcoin mining difficulty

As of Decem­ber 31, 2022, Bit­coin min­ing dif­fi­cul­ty stood at 35.36 tril­lion, up from 24.27 tril­lion one year back.

Bitcoin Difficulty
Bit­coin Difficulty

This fig­ure rep­re­sents the amount of com­put­ing pow­er applied to min­ing this par­tic­u­lar cryp­tocur­ren­cy every 14 days based on the amount of hash­ing pow­er com­pet­ing for rewards on the network.

A greater min­ing dif­fi­cul­ty indi­cates that more min­ers are try­ing to obtain this cryp­tocur­ren­cy. Hash­ing refers to the amount of pro­cess­ing pow­er that PCs use to build the blockchain: the more blocks of ver­i­fied trans­ac­tions are processed, the more bit­coin is mined. Despite a volatile mar­ket and a bliz­zard last month, min­ing dif­fi­cul­ty adjust­ed every 2016 block.

Bitcoin difficulty adjustment percent change (Source: Glassnode)
Bit­coin dif­fi­cul­ty adjust­ment per­cent change (Source: Glassnode)

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