Bitcoin Faces Quantum Threats and Mining Incentive Crisis

A former Meta and Google engineer has sounded an alarm about two potential threats to Bitcoin's security: quantum computing and decaying miner incentives. Patrick Shyu, who previously worked at both tech giants, warned that these 'ticking time bombs' could compromise the cryptocurrency's integrity.

The first threat, according to Shyu, is the erosion of Bitcoin's security budget due to declining block rewards. As new coin issuance shrinks, the block subsidy is cut roughly every four years, currently standing at 3.125 BTC. The next halving is expected in 2028, and Shyu noted that a missing fee economy has failed to replace block rewards.

This has led to a slow death spiral, where fees fade, miners switch off, security drops, and the network weakens. Hashprice, a daily measure of mining revenue per unit of computing power, hovers around $30 per PH/s this month, and miners absorbed an 18% hashprice crash in late June.

The second threat is quantum computing, which could break Bitcoin's cryptography using Shor's algorithm to derive private keys from exposed public keys. The timelines for this potential 'Q-Day' vary widely across experts, ranging from 2030 to 2035.