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My (limited) understanding of bitcoin and other cryptocurrencies is that the costs of "mining" bitcoins was quite low in the early days, and the limiting factor in how fast they were mined was the small number of people who had the infrastructure to do so. As time went on, however, the algorithms for mining bitcoins made it harder and and harder to get a new bitcoin in this way, and it is now rather difficult for anyone but the most serious miners to successfully mine a new coin.

This description of bitcoin's history makes it sound like an awful like a normal commodity such as crude oil: it's easy to get the first barrels out of the ground, when there's not much capacity to do so; but it gets harder as time goes on. The net result (according to Hubbert, at least) is that there is a peak in the extraction rate of the commodity. This is often referred to as "peak oil" in the case of crude oil.

Has anyone done a similar analysis to find out when "peak Bitcoin" or "peak Etherium" or what-have-you will occur? In other words, in what year will the rate at which new bitcoins are being mined reach its peak? Has this happened already? Or is there something about cryptocurrencies that make them immune to these sorts of effects?

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    I've removed some comments that were needlessly unkind and debated a peripheral aspect of the question. Please keep comments constructive and nice, post follow-up questions as new topics, and post answers in the answer section, not in comments on the question.
    – Murch
    Mar 5 at 13:47
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At the beginning of Bitcoin, every newly mined block (about every 10 minutes) creates 50 bitcoins. This is called the block subsidy. About every 4 years, this number cuts in half. Therefore, the peak extraction rate was about the first 4 years of Bitcoin's existence.

In fact, it was from 3 January 2009 to 28 November 2012.

The block reward includes both the block subsidy, and the transaction fees of transactions included in the block, so miners still get bitcoins, but they are not newly "extracted" bitcoins, they are bitcoins that someone else has paid.

Note that one block is mined about every 10 minutes. The number of miners is irrelevant. The speed of the miners is irrelevant. The system automatically adjusts itself so that one block is mined about every 10 minutes. That is the only reason why mining requires a lot more computational power than it used to - you are competing with a lot more people.

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    Small nit: the block reward is composed of two parts: transaction fees and the block subsidy (the new coins). So when you say block reward, you may want to more specifically write "block subsidy".
    – Murch
    Mar 3 at 17:34
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    It sounds like an important difference between bitcoins and a natural resource such as crude oil is that the total production rate is "throttled" by design, and that the total production rate has been slowly decreased over the years (again, by design). So the economic forces that lead to a nice symmetric Hubbert peak for a natural non-renewable resource are obscured or overwhelmed. Mar 3 at 20:06
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    @MichaelSeifert Yes, as I said, by design, there is one block every 10 minutes. There is absolutely nothing you can do to prevent that - apart from mining so fast that the adjustment algorithm doesn't adjust fast enough!
    – user253751
    Mar 4 at 11:07
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    which is basically what happened in 2010 according to Murch's answer; so many miners were joining the network that the algorithm was always behind, and the average block time was 7.7 minutes.
    – user253751
    Mar 4 at 12:15
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According to comments by the project's founder, Bitcoin's issuance rate was indeed inspired by that of precious metals. However, it is implemented algorithmically, of course, which artificially limits the issuance rate rather than actually being an abundant resource getting consumed over time.

The bitcoin reward schedule halves the block subsidy every 210,000 blocks (~4 years) and the difficulty adjusts every 2,016 blocks (~14 days). The adjustment retargets the network to a 10-minute block interval. This process has increased the mining difficulty by more than a factor of 20 trillion since Bitcoin started.

Per the halvings, the reward schedule implements a geometric series. Each reward epoch produces half of all remaining bitcoins: 1/2 + 1/4 + 1/8 + … ↦ 1. The first reward epoch from 2009 to 2012 minted 50 BTC per block which resulted in creation of 10.5M bitcoins (again, half of the final supply).

However, we can be even more specific. Among those four years, 2010 saw the greatest increases in hash rate which resulted in blocks being found much faster than the targeted 10 minute interval throughout the year.

Blocks per year:
2009: 32,486
2010: 67,920
2011: 59,623
2012: 59,324 (subsidy halved in November)

Due to the exploding hash rate, 2010 produced 13.9% more bitcoins than 2011. So, I'd say that "Peak Bitcoin" was 2010 with 3,396,000 bitcoins created in a single year.

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The question contains a brief description of Bitcoin’s history, followed by this:

This description of bitcoin's history makes it sound like an awful like a normal commodity such as crude oil …. The net result (according to Hubbert, at least) is that there is a peak in the extraction rate of the commodity. This is often referred to as "peak oil" in the case of crude oil.

So let us go through it and see if Bitcoin really is like a “normal” (physical) commodity.

[Bitcoin] My (limited) understanding of bitcoin and other cryptocurrencies is that the costs of "mining" bitcoins was quite low in the early days

[crude oil] it's easy to get the first barrels out of the ground

Correct on both counts, but for different reasons. These reasons are discussed below.

In fact, in the early days of Bitcoin, the mining cost was so low that Bitcoin Core had a user-friendly “Generate Coins” option.

[Bitcoin] the limiting factor in how fast they were mined was the small number of people who had the infrastructure to do so

[crude oil] it's easy to get the first barrels out of the ground, when there's not much capacity to do so

(emphasis added)

Incorrect on both counts:

  1. Bitcoin: As explained in the other answers, the target rate of Bitcoin mining is arbitrarily set at one block per 10 minutes. To achieve this, the difficulty of mining a block is adjusted every 2 016 blocks (about 2 weeks).
  2. Crude oil: The initial ease of extracting crude oil was related to the large reserves of crude oil in easily accessible locations. The lack of activity in this area was only indirectly related; this lack of activity meant that the easily extracted reserves had not yet been extracted.

[Bitcoin] As time went on, however, the algorithms for mining bitcoins made it harder and and harder to get a new bitcoin

[crude oil] but it gets harder as time goes on

Correct on both counts, but again for different reasons.

Bitcoin Core’s “Generate Coins” option did not last long. The option was removed in 2011 via pull request #142, which noted:

GUI users … are unlikely to understand upon first contact that they will waste electricity for year(s), before possibly generating a single block.

The underlying code was removed in 2016.

Why was this? Of course, as time went on, the miners collectively became better at mining, and therefore mined blocks faster than the target of one per 10 minutes, which resulted in the difficulty increasing. As the difficulty increased, new ways of mining had to be developed. Mining moved from CPUs to GPUs to even more specialised hardware. (Interestingly, miners also began chasing cheap electricity.)

As for crude oil, producers naturally extract the easiest reserves first, meaning that the remaining reserves are more difficult to extract.

[Bitcoin] As time went on, however, the algorithms for mining bitcoins made it harder and and harder to get a new bitcoin in this way

(emphasis added)

What way?

[Bitcoin] and it is now rather difficult for anyone but the most serious miners to successfully mine a new coin.

Correct. Bitcoin mining now requires specialised equipment that is generally expensive to obtain and expensive to run. The difficulty of locating, never mind extracting, crude oil has also greatly increased.

Has anyone done a similar analysis to find out when "peak Bitcoin" or "peak Etherium" or what-have-you will occur? In other words, in what year will the rate at which new bitcoins are being mined reach its peak? Has this happened already? Or is there something about cryptocurrencies that make them immune to these sorts of effects?

We can now see that these questions do not make sense, at least not in the way you thought they did. In fact, there is another problem with your analogy: Bitcoin includes arbitrary reductions in the block subsidy (the amount of new Bitcoin created each time a block is mined). This has no analogue in physical commodities.

But, in practice, we can observe when peak Bitcoin occurred, which has been covered in the other answers. It occurred during the early days of Bitcoin, when the block subsidy was at its highest and an explosion in mining capacity overwhelmed the fortnightly difficulty adjustment.

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