What did the Block Chair highlight about Bitcoin’s security budget?

July 11th What did the Block Chair highlight about Bitcoin’s security budget?

Blockchain Explorer and Analytics Firm Blockchair recently launched its budget. Day is a website designed to raise awareness and encourage discussion about the decline in Bitcoin security budget. This is an issue that could threaten the long-term viability of your network. The platform presents a simplified live visualization so that users can understand how Bitcoin security is funded through a combination of block subsidies and transaction fees. With block subsidies halving every four years and the fare market still undeveloped, the budget underscores the increased risk of insufficient mining incentives, which could expose the network to a potential 51% attack. The site also explores potential responses, ranging from scaling solutions to controversial proposals such as changes to 21 million BTC supply caps. By addressing widespread misconceptions such as relying on Hashrate’s growth and optimistic price forecasts, Blockchair aims to promote more informed, solution-oriented debates about Bitcoin’s future security.

How does Bitcoin security model actually work?

Bitcoin’s security model is based on a distributed proof of job (POW) consensus mechanism. This mechanism involves miners spend computational energy to validate transactions and protect the network. This model relies on economic incentives to adjust participants’ interests and to block malicious behavior. Miners compete to solve the encryption puzzle, and those who first find a valid solution will win the right to add new blocks to the blockchain. This process requires significant energy consumption and hardware investment, making attacks like double spending and chain reorganization economically unfeasible, unless the attacker controls most of the total network hashrate. The difficulty adjustment algorithm ensures that blocks are generated every 10 minutes regardless of changes in network hash power, maintaining a stable cadence of predictable publication and transaction processing.

A “security budget” refers to the total amount of value paid to a miner to encourage this ongoing work. These are two important factors: block subsidies and transaction fees. Block subsidies are new bitcoins created in each block, starting at 50 btc, half every four years (currently at 3.125 BTC per block as of half of 2024). Transaction fees are paid by users to include transactions in blocks, and become more and more important over time as subsidies decrease. Together, these rewards must remain economically attractive enough to maintain participation of miners. If security budgets are below what miners need to cover operational costs, some may drop networks, reduce hashrates, and make them more vulnerable to system attacks.

Bitcoin’s long-term security model predicts that the final face will be eliminated from block subsidies approaching zero around 2140. As a result, the network ultimately relies entirely on transaction fees to maintain its security budget. This shift has made the ongoing high demand for block space and healthy rate markets very important. If trading volumes and fees are too low in the unsubsidized future, Bitcoin could struggle to maintain sufficient hash power unless alternative mechanisms (such as optional sidechains and off-chain solutions such as lightning networks) generate sufficient economic activity to maintain base tier fees. Critics have questioned whether fees alone are sufficient to maintain robust security, but supporters argue that rarity, adoption and economic utility support a naturally viable fee market.

An important feature of this model is its game-theoretical resilience. Miners are encouraged to act honestly, as attacking networks is not only expensive, but also undermine trust in the system and undermine the value of the attacker’s own Bitcoin holdings and mining infrastructure. Furthermore, as Bitcoin’s fixed supply schedules have declined over time the security budget issuance component, the long-term viability of the network depends on demand-driven transaction fees and ongoing technology adaptation. Therefore, Bitcoin’s security model is not static, but a dynamic equilibrium of economic incentives, user behavior and technological innovation, all of which need to continue evolving in tandem to maintain network integrity.

What is a budget? Why do you claim that Bitcoin’s security model is risky?

Blockchair’s newly launched website, Buldge.day, serves as educational resources and warning signals for bitcoin security budgets that decrease by 50% every 210,000 blocks when herbs occur, or block subsidies, which can become a structural issue with a long-term impact on network history. The site provides an explicit language breakdown of how Bitcoin’s POW model relies on miners’ compensation through block subsidies and transaction fees, and what happens when its financial incentives become weaker. Budget fills the budget as blocks’ rewards are halved every four years and trading fees cannot fill the gap. Day argues that Bitcoin could ultimately face situations where its economic defenses no longer thwart attacks such as double spending, trading censorship, or network stalling. The concern is not theoretical. It is based on measurable trends and declines in miners’ revenue compared to the overall value of Bitcoin.

At the heart of the site’s discussion is the decline in block subsidies, which now drops to 3.125 BTC per block, eventually reaching zero around 2140. Theoretically, this reduction subsidy should be offset by a robust fee market, but it suggests that no data has occurred. As of early 2025, trading fees have contributed only a small portion of miners’ total revenue, and fee levels remain low as users are motivated to seek cheaper alternatives in other chains due to limited block space. The budget warns that if fees and revenue from rising BTC prices do not outweigh the decline in subsidies, there may be fewer miners who may feel they are worthy of securing a network. This reduces hash power, lowers the cost threshold for successful 51% attacks, and weakens the deterrent that underpins Bitcoin’s unreliable design.

Budget outlines some potential paths, ranging from technical scaling to more fundamental protocol changes. The first option, on-chain scaling, includes increasing block size, reducing block time, or incorporating optional block extensions. These changes could potentially increase transactions per block, allowing individual fees to be reduced while maintaining appropriate total miner compensation. More controversial proposals include shifting Bitcoin consensus mechanisms through mechanisms such as tail ejection and demerging to alternatives such as proof of fact and alternatives that implement continuous inflation. However, these approaches raise philosophical and practical concerns, such as violations of Bitcoin’s fixed supply principles and increased risk of centralization. This site presents these as trade-offs that need to be critically evaluated, rather than as approval.

A key part of the budget is challenging the widely held assumptions about Bitcoin’s future security. The site warns that hashrates alone will not guarantee security, especially when it comes to cheap energy or hardware. It also counters the idea that future Bitcoin price increases will automatically resolve the issue, allowing miners to be paid with BTC, potential attackers to be funded with BTC, and FIAT’s negative predictions are made regardless of network security. The conclusion is direct but measured. Without meaningful adaptations and reforms, Bitcoin’s current incentive model may not be sufficient to secure a chain in the long term. The site does not claim to provide a final answer, but rather seeks to raise technical and economic issues that are below the debate despite its fundamental importance.

Is the block chair problem trolling or is the conversation worth it?

The team behind the budget deserves recognition by opening conversations that have long been preferred over side steps by many of the Bitcoin community. Addressing the long-term viability of Bitcoin security budgets is not an easy task, especially when challenging the general narrative of self-sufficiency and inevitable success. Rather than promoting self-satisfaction, the project highlights the true risks associated with reduced incentives for miners and the assumption that rising prices or speculative demand will naturally resolve all structural problems. By presenting data in a clear and accessible way, the budget invites the community to be honest with these concerns. This requires both technical insight and a willingness to question legitimacy.

When Bitcoin was introduced, it was envisioned as a peer-to-peer electronic cash system, allowing for large amounts of daily trading at a minimum fee. Early usage reflects its purpose, with microtransactions and direct payments playing a central role. But over time the story changed. Faced with intense internal debate about scalability limitations and block size, Bitcoin’s dominant use cases have evolved to that of “digital gold.” This transformation has provided certain benefits such as broader institutional acceptance and enhanced and valuable appeals, but also produced unintended side effects. The decline in Bitcoin usage has weakened the development of a sustainable fee market that could ultimately replace block subsidies. This dynamic poses a structural challenge to the long-term integrity of Bitcoin’s work proof system. Relying on rising transaction fees to compensate for falling subsidies envisages continuous, large-scale use of the baseline. However, when most owners are investors who rarely move coins, and those seeking low-cost move to a tier 2 solution or alternative blockchain, the on-chain activity needed to support miners’ incentives may not be realized.

With the perceived impact on network fees and differences from Bitcoin’s original purpose, unorthodox tokenization protocols such as ordinal numbers and runes have sparked major controversy within the Bitcoin community. These protocols allowed the inscription and mint of digital assets on the Bitcoin blockchain, and in many cases, trading fees have skyrocketed during periods of high activity. For many everyday users, this rendered Bitcoin is temporarily unavailable, making basic transactions prohibitively expensive. Critics, especially the longtime Bitcoiner, dismissed these tokens, messed up the network and misused block space for speculative purposes. However, from the perspective of miners operating at thin razor margins in an increasingly competitive environment, these fee spikes needed so much revenue that some miners began offering private mempools and out-of-band relay channels directly to tokenization projects, such as marathon slipstreams. As block subsidies have declined over time, the additional revenue generated by ordinances and rune-driven demand provided temporary economic reprieves, highlighting the growing tension between Bitcoin’s evolving use cases and its reduced security budget.

Several voices from the Bitcoin development community, including Peter Todd, have expressed concern about the issue. Todd is openly debating the possibility that hard forks introducing modest, continuous inflation, such as tail release, or that it may be necessary to ultimately protect the network as subsidies approach zero. Such a proposal is naturally controversial as it challenges one of the fixed 21 million btc supply caps, one of Bitcoin’s most sacred design principles. However, raising these options should not be seen as heresy, but as a responsible effort to maintain the long-term viability of the system. The budget does not specify a specific solution, but it should be praised for bringing these perspectives to the surface. Ignoring the potential discrepancies between current usage patterns of Bitcoin and its future security model, the network will not give favor. By choosing to take difficult questions seriously, the leadership behind the budget ensures that Bitcoin evolution is guided by informed deliberations rather than blind faith.