Bitcoin MiCA White Paper1

Juan Ignacio Ibañeza
Lena Klaaßenb
Ulrich Gallersdörferb
Christian Stollb

V1.0: 14 March 2024

1This document takes inspiration from the whitepaper by Quirós, Ibañez and Maestre: Maestre Rodríguez,
J.; Ibañez, J.I.; Quirós Aguilar, N. (2024). Libro Blanco Extendido de Bitcoin. Adaptado al Reglamento MiCA.
LOGOS, 5(1): 102-125
The publication of this document is made under the terms of the Creative Commons CC BY 4.0 licenceavailable at: https://creativecommons.org/licenses/by/4.0/
AUTHORS' WARNING: The authors offer this work to the community under the aforementioned licence.
Under no circumstances is any responsibility assumed for the uses that third parties make of it. Any
derivative work or work based on this one must include a clearly visible note, indicating that it is a work
based on the original creation of Juan Ignacio Ibañez, Lena Klaaßen, Ulrich Gallersdörfer, and Christian
Stoll, including a link to it.
a

UCL Centre for Blockchain Technologies, http://blockchain.ucl.ac.uk/, author’s email: j.ibanez@ucl.ac.uk

b

CCRI - Crypto Carbon Ratings Institute, https://carbon-ratings.com, email: hi@carbon-ratings.com

2 of 32
Bitcoin MiCA White Paper

Disclaimer: This document is written as an academic exercise, with the goal of exploring
the feasibility of writing a white paper in accordance with Regulation (EU) 2023/1114 (MiCA). It ismeant as a Proof of Concept (PoC) illustrating a concrete application of the requirements of MiCA.
Like the MiCA white papers PoC shared by ESMA2, this document is solely for the purposes of the
PoC, to inform the public as to how a crypto-asset white paper could work, inspire public debate
and feedback, and enhance the public conversation around the implementation of EU regulations.
The authors of this white paper do not accept liability or responsibility in relation to the publishedmaterial as the purpose of the PoC is to showcase how a white paper could be written, taking theworld’s most important crypto-asset project as an example.
We, the authors of this white paper, are neither offerors, developers, advisors, or service providersof this crypto-asset, nor can be considered a part of this crypto-asset project. This white paper iswritten solely for educational, academic and scientific purposes.
The authors of this white paper are not an offeror, persons seeking admission to trading, nor
operators of the trading platform. Nevertheless, we declare that, to the best of our knowledge, theinformation presented in the white paper is fair, clear and not misleading, and the whitepaper
makes no omission likely to affect its import.

2

https://www.esma.europa.eu/document/mica-white-papers-poc

3 of 32
Bitcoin MiCA White Paper

2024-03-14|[N: I.01]

N: 1.00 Table of contents

I. Compliance with duties of information........................................................................................... 4
II. Summary........................................................................................................................................ 5
Part A: Information about the offeror or the person seeking admission to trading............................6
Part B: Information about the issuer, if different from the offeror or person seeking admission to
trading................................................................................................................................................ 8
Part C: Information about the operator of the trading platform in cases where it draws up the
crypto-asset white paper................................................................................................................... 9Part D: Information about the crypto-asset project......................................................................... 10Part E: Information about the offer to the public of crypto-assets or their admission to trading.... 14
Part F: Information about the crypto-assets.................................................................................... 17Part G: Information on the rights and obligations attached to the crypto-assets..............................18
Part H: Information on the underlying technology........................................................................... 21
Part I: Information on the risks......................................................................................................... 26
Part J: Information on the sustainability indicators in relation to adverse impact on the climate andother environment-related adverse impacts.................................................................................... 30

4 of 32

I.

Compliance with duties of information

N

Field

Content

I.02

Statement in accordance with
Article 6(3) of Regulation (EU)2023/1114

This crypto-asset white paper has not been approved byany competent authority in any Member State of theEuropean Union. The offeror of the crypto-asset is solely
responsible for the content of this crypto-asset white
paper.

I.03

Compliance statement inaccordance with Article 6(6) ofRegulation (EU) 2023/1114

This crypto-asset white paper complies with Title II ofRegulation (EU) 2023/1114 and, to the best of theknowledge of the management body, the information
presented in the crypto-asset white paper is fair, clear
and not misleading and the crypto-asset white paper
makes no omission likely to affect its import.

I.04

Statement in accordance with
Article 6(5), points (a), (b), (c) ofRegulation (EU) 2023/1114

The crypto-asset may lose its value in part or in full, may
not always be transferable and may not be liquid.

I.05

Statement in accordance with
Article 6(5), point (d) ofRegulation (EU) 2023/1114

false

I.06

Statement in accordance with
Article 6(5), points (e) and (f) ofRegulation (EU) 2023/1114

The crypto-asset is not covered by the investor
compensation schemes under Directive 97/9/EC of theEuropean Parliament and of the Council.
The crypto-asset is not covered by the deposit
guarantee schemes under Directive 2014/49/EU of theEuropean Parliament and of the Council.

5 of 32
II.

SummaryN

Field

Content

I.07

Warning inaccordance with
Article 6(7), second
subparagraph, ofRegulation (EU)2023/1114

The summary should be read as an introduction to the crypto-asset
white paper.
The prospective holder should base any decision to purchase theasset-refenced token on the content of the crypto-asset white
paper as a whole and not on the summary alone.
The offer to the public of the crypto-asset does not constitute anoffer or solicitation to purchase financial instruments and any suchoffer or solicitation can be made only by means of a prospectus orother offer documents pursuant to the applicable national law. The
crypto-asset white paper does not constitute a prospectus asreferred to in Regulation (EU) 2017/1129 of the European Parliamentand of the Council (36) or any other offer document pursuant toUnion or national law.

I.08

Characteristics ofthe crypto-asset

This document serves as an introduction to the Bitcoin network andthe bitcoin crypto-asset, aimed at providing potential holders withessential information about Bitcoin.
Bitcoin is a peer-to-peer payments network offering a method totransact, store value and protect against debasement without
reliance on a central governance or clearing authority. It is a digitalledger that is public and permissionless, which means that anyone
can read the entire history of transactions in the ledger, and anyone
can use the ledger to transact. This means that the network istransparent. However, it is also pseudonymic, that is, transactions
and participants are identified by addresses rather than real-world
identities. The network is not anonymous, but one real-world
identity may correspond to multiple addresses and vice versa.
The unit of account in the Bitcoin network is “bitcoin”, peer-to-peer
electronic cash, each unit of which is subdivisible in 100 million
units called “satoshis”. A total of 21 million bitcoin will ever comeinto existence; this limited supply intends to act as a deflationary
force over time, leading to long-term protection against
debasement. Transactions in bitcoin are grouped in packets called“blocks” appended consecutively.
Transactions with bitcoin, once completed, are characterised by astrong sense of immutability and irreversibility. This is because
editing the chain of blocks requires a very strong form of

6 of 32
“consensus” among network participants, and the roles andeconomic incentives in the protocol are designed in such a way thatmake double-spending attacks infeasible. A key component in thisconsensus is the “proof of work” algorithm, which attaches thelikelihood of earning the right to submit the next block to theamount of hashing (“work”, which, controlling for computational
efficiency, equals energy) undertaken, and not to the number ofdigital identities issuing votes, which increases security. As hashingis an economically costly activity, and dishonest transaction
validators’ blocks will be rejected even if they have undertaken thework, the protocol places strong incentives for honest network
maintenance without need for a central authority.
I.09

Key information
about the offer tothe public or
admission to
tradingn/aPart A: Information about the offeror or the person seeking admission to tradingThis section should be completed by the offeror or person seeking admission. As this whitepaper
is written as an academic exercise, it is not applicable. We reproduce the ESMA PoC for
guidance:

N
A.01

Field

Content

Name

Free alphanumeric text

A.02

Legal form

ISO standard 20275 ‘Financial Services – Entity
Legal Forms (ELF)

A.03

Registered address

Free alphanumeric text

A.04

Head officeFree alphanumeric text

A.05

Registration date

YYYY-MM-DD

7 of 32
Legal entity identifier as defined in ISO 17442,
e.g. 254900ARU0VC1WY6GJ71

A.06

Legal entity identifier

A.07

Another
identifier
required
pursuant to applicable national
law
TBD

A.08

Contact telephone number

123456789

A.09

E-mail address

Free alphanumeric text

A.10

Response time

Numerical {INTEGER-3}

A.11

Parent company

Legal entity identifier as defined in ISO 17442 oranother identifier required pursuant to applicablenational law, e.g. 254900ARU0VC1WY6GJ71

A.12

Members of management bodyFree alphanumeric text

A.13

Business activity

Free alphanumeric text

A.14

Businesscompany

activityofparentFree alphanumeric text
‘true’ – Yes

A.15

Newly established‘false’ – No

A.16

Recent financial condition

Free alphanumeric text

A.17

Financial
registration

condition

sinceFree alphanumeric text

8 of 32
Part B: Information about the issuer, if different from the offeror or person seeking
admission to tradingThis section should be completed by the issuer. As this whitepaper is written as an academic
exercise, it is not applicable.
Moreover, Bitcoin does not have an issuer. Bitcoin units (“bitcoin”) are issued to bitcoin validators(“miners”) through a stochastic process that statistically rewards the ones that have spent themost effort (“work”) in the consensus mechanism. Issuance of new bitcoin is open to anyone whowants to contribute to the security of the network via mining, and thus identities involved in
issuance are not fixed.
We reproduce the ESMA PoC for guidance:

N

Field

Content

B.01

Name

Free alphanumeric text

B.02

Legal form

Free alphanumeric text

B.03

Registered address

Free alphanumeric text

B.04

Head officeFree alphanumeric text

B.05

Registration date

YYYY-MM-DD

B.06

Legal entity identifier

Legal entity identifier as defined in ISO 17442,
e.g. 254900ARU0VC1WY6GJ71

B.07

Another
identifier
required
pursuant to applicable national
law
TBD

B.08

Parent company

Legal entity identifier as defined in ISO 17442 oranother identifier required pursuant to applicablenational law, e.g. 254900ARU0VC1WY6GJ71

B.09

Members of management bodyFree alphanumeric text

9 of 32
B.10

Business activity

B.11

Businesscompany

activity

Free alphanumeric textofparentFree alphanumeric text

Part C: Information about the operator of the trading platform in cases where it draws up
the crypto-asset white paper

This section should be completed by the offeror or person seeking admission. As this whitepaper
is written as an academic exercise, it is not applicable. We reproduce the ESMA PoC for
guidance:
N

Field

Content

C.01

Name

Free alphanumeric text

C.02

Legal form

Free alphanumeric text

C.03

Registered address

Free alphanumeric text

C.04

Head officeFree alphanumeric text

C.05

Registration date

YYYY-MM-DD

C.06

Legal entity identifier

Legal entity identifier as defined in ISO 17442,
e.g. 254900ARU0VC1WY6GJ71

C.07

Another
identifier
required
pursuant to applicable national
law
TBD

C.08

Parent company

Legal entity identifier as defined in ISO 17442 oranother identifier required pursuant toapplicablenationallaw,e.g.
254900ARU0VC1WY6GJ71

10 of 32

C.09

Reason for crypto-asset white
paper preparation

Free alphanumeric text

C.10

Members of management bodyFree alphanumeric text

C.11

Operator business activity

Free alphanumeric text

C.12

Businesscompany

C.13

Other persons drawing up the
crypto-asset
white
paper
according to Article 6(1), second
subparagraph, of Regulation (EU)2023/1114
Free alphanumeric text

C.14

Reason for drawing the white
paper by persons referred to in
Article6(1),secondsubparagraph, of Regulation (EU)2023/1114
Free alphanumeric text

activityofparentFree alphanumeric text

Part D: Information about the crypto-asset project
N

Field

Content

D.1

Crypto-asset
project nameBitcoin

D.2

Crypto-assets
namebitcoin11 of 32
D.3

Abbreviation

BTC, XBT3

D.4

Crypto-asset
project
description

Bitcoin is a purely peer-to-peer form of electronic cash, enabling
online payments without reliance on any financial institution. As
described in the summary in compliance with Section 6.7, theproject prioritises transparency of transactions, security andimmutability through a multi-step process of mining, validationand consensus, and permissionless read and write access to theprotocol with nodes being able to rejoin the network at will.

D.5

Details of all
natural or legal
persons involvedin theimplementationof thecrypto-asset
project

1. Creator: Bitcoin was originally created by Satoshi
Nakamoto, a person or group of people whose identity is
not established and is considered to no longer be involvedin the Bitcoin Core project.
2. Advisors: n/a. Bitcoin does not have formal advisors in the
traditional sense of a crypto-asset project. Its development
and strategic direction are influenced by the contributions
and discussions within the Bitcoin community, including
developers, miners, and users participating in forums likethe BitcoinTalk forum and the bitcoin-dev mailing list.
3. Development team: Since Bitcoin is open-source, it
doesn't have a formal, centralised development team.
However, the Bitcoin Core software and implementation of
the Bitcoin protocol is maintained and improved by agroup of volunteer developers worldwide. There is a
publicly available list of Bitcoin Core contributors in the
Github repository, including developers' usernames, withsome choosing to provide their real names and others
remaining anonymous. As of the date of publication of thiswhitepaper, this list includes 96 usernames. As thiswhitepaper is merely an educational instrument, we will
omit listing their usernames, legal names and addresses.
However, one should note that Bitcoin Improvement
Proposals (BIPs) are only included in the Github repository
after being submitted to the dev@lists.linuxfoundation.org
mailing list, managed by The Linux Foundation. Its legal

3

Note: Bitcoin does not have a central governing authority, and participants may disagree about which
versions of the protocol to support. These disagreements may result in the network splitting into two, insuch a way that the two networks share a common chain of blocks and set of rules up until a point, anddiverge in one or both dimensions thereafter. This event is known as a “fork” and each of the resulting
networks is also denominated a “fork”. Due to the lack of central authority, no fork is more legitimate thanany other, and they can all be called “Bitcoin”. For regulatory compliance purposes, this whitepaper focuseson the “Bitcoin Core” fork (BTC), but all Bitcoin forks are Bitcoin and emerge from Satoshi Nakamoto’s
original Bitcoin whitepaper. Tickers for other Bitcoin forks, not covered by this whitepaper include Bitcoin
Cash (BCH), Bitcoin SV (BSV), Bitcoin Gold (BTG), Bitcoin Diamond (BCD), Bitcoin Scrypt (BTCS), BitcoinZ(BTCZ), Bitcoin Vault (BTCV), Super Bitcoin (SBTC), Bitcoin Private (BTCP), and Bitcoin Atom (BCA).

12 of 32
address is 548 Market St PMB 57274 San Francisco,California 94104-5401.
4. Crypto-asset service providers: n/a. There are no service
providers operating formally with the Bitcoin project,because as a decentralised project there is no entity toformally engage with. There are entities such as exchanges(e.g., Coinbase, Binance), wallet providers (e.g., Trezor,
Ledger),payment
processors(BitPay,
Coinbase
Commerce), mining pools (F2Pool, Antpool), Layer 2
ecosystem building entities (Lightning Labs, Stacks
Foundation) that independently choose to leverage the
Bitcoin protocol and are, in a broad sense, relevant for its
growth, but this whitepaper will not identify them as they
are not formal providers to the project. Nonetheless, theBitcoin Core repository is currently maintained in GitHub, adeveloper platform owned by GitHub, Inc., with a legal
address at 88 Colin P Kelly Jr Street San Francisco, CA
94107 United States.

D.6

Utility Token
Classification

false

D.7

Key Features ofGoods/Services
for Utility Token
Projects

n/a

D.8

Plans for the
token

Past milestones:
●
●
●

●
●
●
●
●

2008: Publication of the Bitcoin whitepaper.
2009: Launch of the Bitcoin network with the mining of thegenesis block (block number 0) on January 3rd.
2010: Bitcoin is used to make a real-world transaction for
the first time when two pizzas are purchased for 10,000
BTC.
2012 (November): The first Bitcoin halving reduces theblock reward from 50 BTC to 25 BTC.
2016 (July): The second Bitcoin halving reduces the block
reward from 25 BTC to 12.5 BTC.
2017 (August): Implementation of Segregated Witness(SegWit).
2020 (May): The third Bitcoin halving reduces the block
reward from 12.5 BTC to 6.25 BTC.
2021 (November): Activation of Taproot and introduction of
Schnorr signatures.

13 of 32
Future milestones:
Unlike other crypto-asset projects, Bitcoin does not have aroadmap. Future milestones are not determined, and depend
entirely on acceptance by the economic majority of Bitcoin users
running full nodes. Currently, the only mechanism to submit
proposals for changes to the protocol are Bitcoin Improvement
Proposals (BIPs). BIPs are first discussed with, and filtered andcopy-edited by the developer team described above, and thendiscussed openly by the community. A BIP becomes an accepted
standard until its status becomes “Final” or “Active” and it
becomes part of the protocol if it achieves consensus by the
majority of users.
The repository of BIPs is located in Github. At the day of
publication of this whitepaper, 389 BIPs are listed. These BIPs
hold different status: active (2), final (24), draft (44), withdrawn (3),rejected (14), proposed (7), replaced (2), deferred (1), obsolete (0).
In general, outstanding BIPs are focused on enhancing
functionality, security, and efficiency. Recent efforts emphasisethe development of new features like Schnorr signatures andTaproot for improved privacy and scalability, alongside proposals
for making Bitcoin more user-friendly through advancements inaddress formats and transaction signing processes. These
proposals reflect ongoing efforts to refine and expand Bitcoin's
capabilities to meet evolving user needs and technologicalstandards. There are a number of proposals and areas of debatereferring to the implementation of Layer-2 systems built on top of
Bitcoin such as the Lightning Network and Stacks, and other
innovations such as Ordinal Theory. Some may see these areas ofwork as a part of the “crypto-asset project” but others may not, as
they are not a part of Bitcoin Core.
D.9

Resource
Allocation

Resources already allocated to the project:
1. Developer Time: Volunteer developers contribute to thecodebase.
2. Mining Infrastructure: Significant investments by miners
in computing hardware and electricity to secure the
network and process transactions. At the time of
publication of this whitepaper, the hash rate of the Bitcoin
Network is approximately 614 exa-hashes per second(EH/s), which assuming an average of 100 tera-hashes per
second (TH/s) per mining ASIC (application-specific14 of 32
integrated circuit) roughly equals 6 million ASICs in
hardware plus accompanying infrastructure.
3. User nodes: There are more than 10,000 Bitcoin nodes
storing a copy of the entire blockchain and participating inconsensus. Some sources place this figure closer to
100,000.
4. Community
Support: Education, advocacy, anddevelopment support are provided by a global community,
including non-profit organisations, research institutions,and individual contributors.
D.10

Planned Use of
Collected Funds
or
Crypto-Assets

n/a. No funds have been formally collected. Most of Bitcoin’s
initial development was self-funded by Satoshi Nakamoto, who
may have received a donation between USD 2,000 and USD 3,600
from an anonymous donor to “pay for website hosting costs andother incidentals”4.

Part E: Information about the offer to the public of crypto-assets or their admission to
trading

This section should be completed by the offeror or person seeking admission. As this whitepaper
is written as an academic exercise, most fields are not applicable.

N

4

Field

Content

E.1

Public Offering and/or
Admission to trading

n/a

E.2

Reasons for Public Offer
and/or Admission to trading

n/a

E.3

Fundraising Target

n/aKuhn, D. (2024) "5 Things Satoshi Nakamoto Correctly Predicted About Bitcoin". CoinDesk. Available athttps://www.coindesk.com/consensus-magazine/2024/02/26/5-things-satoshi-nakamoto-correctly-predicted-about-bitcoin/15 of 32
E.4

Minimum Subscription Goals

n/a

E.5

Maximum Subscription Goal

n/a

E.6

Oversubscription
Acceptance

n/a

E.7

Oversubscription Allocation

n/a

E.8

Issue Price

n/a

E.9

Official currency or any other n/a
crypto-assets determining
the issue price

E.10

Subscription fee

n/a

E.11

Offer Price Determination
Methodn/a

E.12

Total Number ofOffered/Traded
CryptoAssets

A total of 21 million bitcoin will ever be issued. This
represents the upper limit of crypto-assets for trading.

E.13

Targeted Holders

n/a

E.14

Holder restrictions

n/a

E.15

Reimbursement Notice

n/a

E.16

Refund Mechanism

n/a

E.17

Refund Timeline

n/a

E.18

Offer Phases

n/a

E.19

Early Purchase Discount

n/a

E.20

Time-limited offern/a16 of 32
E.21

Subscription period
beginning

n/a

E.22

Subscription period end

n/a

E.23

Safeguarding Arrangements
for Offered Funds/CryptoAssets

n/a

E.24

Payment Methods for
Crypto-Asset Purchase

n/a

E.25

Value Transfer Methods for
Reimbursement

n/a

E.26

Public Offers

n/a

E.27

Right of Withdrawal

n/a

E.28

Transfer of Purchased
Crypto-Assets

n/a

E.29

Transfer Time Schedule

n/a

E.30

Purchaser's TechnicalRequirements

To hold bitcoin, a purchaser needs to directly managea Bitcoin-compatible wallet (“self-custody”) and its
private keys, or have a third party manage such awallet and keys. Bitcoin wallets may be “cold wallets”,
disconnected from the internet (paper wallets, soundwallets, hardware wallets) or “hot wallets”, connectedto the internet (software wallet apps or on-linebrowser wallets).

E.31

CASP name

n/a

E.32

Placement form

n/a

E.33

Trading Platforms

n/a

E.34

Trading Platforms Access

n/a

E.35

Involved costsn/a17 of 32
E.36

Offer Expenses

n/a

E.37

Conflicts of Interest

n/a

E.38

Applicable law

n/a

E.39

Competent court

n/aPart F: Information about the crypto-assets

N

Field

F.1

Crypto-Asset
Type

F.2

Crypto-Asset
Characteristics

F.3

Crypto-Asset
Functionality
Description

Content
Under the MiCA taxonomy, bitcoin is a crypto-asset of the “other”
type.
●

ISO 24165 DTI code: 4H95J0R2X●

ISO 24165 FFG DTI: V15WLZJMF●Free alphanumeric text: The crypto-asset bitcoin is a“native digital token” using blockchain technology (publicdistributed ledger technology), with the hash algorithm
DoubleSHA-256.
Its
genesisblock
hash
000000000019d6689c085ae165831e934ff763ae46a2a6c1
72b3f1b60a8ce26f, and genesis block UTC Timestamp
2009-01-03T18:15:05, long name “Bitcoin”, short name
“BTC”
and
“XBT”,
token
reference
URL
https://github.com/bitcoin/bitcoin,unit
multiplier
100,000,000, and the underlying asset external identifier
ISIN: XTV15WLZJMF0.

Bitcoin are a means of payment (electronic cash) and a digitalasset that may serve as a store of value, specifically protection
against debasement. As a digital asset global in nature, it enables
sending and receiving payments anywhere in the world at any
time. It also transferred in a peer-to-peer manner, without need forfinancial intermediation. Because of this and the ability to
self-custody the asset, it offers protection against confiscation.
The crypto-asset does not offer other functionalities such as

18 of 32
accruing interest or staking rewards, awarding governance rights,
entitling to airdrops.
F.4

PlannedApplication of
Functionalities

Functionalities described in section F.3 are already implemented
since the crypto-asset’s launch. For a discussion of other future
improvements, see section D.8 “Future milestones”.

Part G: Information on the rights and obligations attached to the crypto-assets

N

Field

Content

G.1

Purchaser
Rights andObligations

Purchasers of bitcoin acquire property over the asset, which
includes the bundle of rights under the applicable legal systems(right to use, right to transfer, etc.). Notably, bitcoin is dependent on
the Bitcoin protocol rules – with any user being free to run the
protocol fork implementation that they choose. The user thus holds
the right to utilise the asset but does not hold a right to force others
to run protocol implementations that they do not wish to run.
Obligations are determined by the applicable legal system but there
are no obligations intrinsic to the purchase of the asset itself.

G.2

Exercise of
Rights andobligations

Depends on the applicable legal system.

G.3

Conditions formodifications ofrights andobligations

There are no rules to create or modify rights and obligations for
bitcoin purchasers, and the only conceivable path towards thatwould be a contractual arrangement among every single bitcoin
owner.

G.4

Future Public
OffersBitcoin's issuance is predefined by its protocol, with a total cap of
21 million BTC, mined at a predictable rate. Currently, this rate is
6.25 BTC per block mined, with a block being mined approximately
every 10 minutes (time is measured from timestamps, and difficultyis adjusted upwards or downwards to trend towards 10 minutes,
with a difficulty adjustment every 2,016 blocks). This new issuance
rate (“block subsidy”) will be halved approximately in April 2024 (to3.125 BTC per block) and will continue to be halved every 210,000
blocks (approximately four years) as it has in the past, until the last
halvings. Three halvings have happened before the publication of

19 of 32
this whitepaper and another 29 are scheduled to occur. With the
32nd halving, the block reward will be reduced to 1 satoshi, andwith the 33nd halving, to 0.5 satoshis. However, as the Bitcoin
protocol does not support unit subdivisions below 1 satoshi, thelast halving will entail the finalisation of the issuance of bitcoin.
There is no issuer in the traditional sense; thus, future offers andretention do not apply as they would in conventional securities or
crypto-assets issued by a central entity.
G.5

Issuer Retained
Crypto-Assets

Unlike other crypto-asset projects, Bitcoin did not have a“pre-mine” and hence no assets were retained by any “issuer”.

G.6

Utility Token
Classification

false

G.7

Key Features ofGoods/
Services of
Utility Tokens

n/a

G.8

Utility Tokens
Redemption

n/a

G.9

Non-Trading
request

false

G.10

Crypto-Assets
purchase orsale modalities

There are no restrictions to the purchase or sale of bitcoin otherthan those imposed by regulation.

G.11

Crypto-Assets
Transfer
Restrictions

There are no technical restrictions to bitcoin transferability otherthan the avoidance of double-spending and following the protocol
rules. Legally, regulation may restrict the transferability of bitcoin.

G.12

SupplyAdjustment
Protocols

In Bitcoin, there are no protocols to vary supply in response tochanges in demand for the crypto-asset. If bitcoin demand
increases, bitcoin issuance does not increase, and if bitcoin
demand decreases, bitcoin issuance does not decrease in
response. Rather, bitcoin issuance is determined algorithmically,
according to the “block subsidy” rules. Block subsidy was originally
50 bitcoin and is scheduled to cut in half every 210,000(approximately every four years). Currently, the subsidy is 6.25
bitcoin. Approximately in the year 2140, the last bitcoin will be20 of 32
mined, with cumulative supply totalling 21 million. This corresponds
to 63 halvings. Once halving number 32 is reached however, bitcoin
issuance will be so small that it will overcome the 8 decimal limit
and will not be describable with Bitcoin’s current parameters.
Mathematically, the formula describing bitcoin issuance can beoutlined as follows:32( )∑ 210, 000
𝑖=0

50
𝑖

2

In this formula, 32 is the number of halvings that will occur before
the last satoshi is mined, i=0 represents the starting index for the
reward era (each 210,000 block period is a “halving era”), 210,000
is the number of blocks between halvings, and 50 is the number of
bitcoin issued per block during starting era i=0.
G.13

SupplyAdjustment
Mechanisms

Although there are no direct mechanisms to adjust to changes inthe demand for the crypto-asset, there is a mechanism to adjust tochanges in mining activity. As mining constitutes one of thechannels through which purchasers may acquire bitcoin, mining
activity may indirectly and partially reflect the demand for theunderlying bitcoin.
New bitcoin are issued every time a miner finds a valid nonce (seesection H.4 for a description of the process). Finding a nonce is astochastic trial-and-error process depending on the amount ofhashing undertaken relative to the difficulty level. If the demand for
bitcoin increases and so does the global bitcoin hash rate, valid
nonces will be found with a frequency shorter than 10 minutes,
leading to an increased supply. The Bitcoin protocol is designed tocompensate for this and ensure that a new block is produced every
10 minutes on average.
This adjustment is produced once every 2,016 blocks(approximately every 2 weeks). As every time that a new block is
added to the blockchain, it includes a timestamp reflecting when it
was mined, the protocol can calculate the time it took to mine 2,016
blocks and compare it with a “target time” of 20,160 minutes (2weeks). If the actual time is below the target time, difficulty is
adjusted upwards; if it is above the target time, downwards. The
difficulty adjustment formula can be described as follows:
𝑁𝑒𝑤 𝑑𝑖𝑓𝑓𝑖𝑐𝑢𝑙𝑡𝑦 = 𝑂𝑙𝑑 𝑑𝑖𝑓𝑓𝑖𝑐𝑢𝑙𝑡𝑦 ×

𝐴𝑐𝑡𝑢𝑎𝑙 𝑡𝑖𝑚𝑒 𝑜𝑓 𝑙𝑎𝑠𝑡 2,016 𝑏𝑙𝑜𝑐𝑘𝑠
𝑇𝑎𝑟𝑔𝑒𝑡 𝑡𝑖𝑚𝑒 𝑜𝑓 2,016 𝑏𝑙𝑜𝑐𝑘𝑠

This ensures that the issuance schedule described in section G.12
is respected. For a more detailed description of the mining process,21 of 32
see section H.4.
G.14

Token Value
Protection
Schemesn/a

G.15

Compensation
schemesn/a

G.16

Applicable law

Due to Bitcoin's decentralised nature, it is not governed by the lawsof any single jurisdiction, making its legal framework complex andvaried globally. The applicable law for matters related to Bitcointransactions would depend on the jurisdiction of the involved
parties.

G.17

Competent
court

The competent court for matters related to Bitcoin transactions
would depend on the jurisdiction of the involved parties.

Part H: Information on the underlying technology

N

Field

H.1

Distributed
ledgertechnology

Content
Public permissionless blockchain, relying on “Nakamoto Consensus”
which leverages the “proof of work” algorithm relying on stochastic
selection of block-proposers by turns (see section H.4). The
blockchain is maintained by:●

Full nodes: They store the entire history of blockchaintransactions, validate blocks and transactions according toconsensus rules, and relay this information to other nodes. A
subset of full nodes are also mining nodes.
○

Mining nodes: They conduct the “work” described in
section H.4.

●

Lightweight or Simplified Payment Verification (SPV) nodes:
They do not store the entire blockchain but can verify
transactions by downloading only the headers of blocks.

●

Listening nodes: They pass new transactions and blocks toother nodes, facilitating efficient data propagation across the22 of 32
network. They help in maintaining the network’s connectivity
and resilience.
H.2

Protocols andtechnical
standards●

Hashing algorithm: SHA-256.

●

Wallet key generation and transaction signature algorithm:
ECDSA (Elliptic Curve Digital Signature Algorithm).

●

Node communication protocol: peer-to-peer (P2P).

●

Scriptinglanguage(stack-based).

●Primary development language: C++.

●

Block size: 1 megabyte (MB).

●Block weight: 4 million weight units (4 MB).

●

Block time: 10 minutes.

fortransactions:

Bitcoin

ScriptH.3

Technology
Usedn/a. Bitcoin is not an asset-referenced token. See section E.30 for a
description of wallets.

H.4

Consensus
Mechanism

The Bitcoin protocol relies on “Nakamoto consensus”, a consensus
process involving the “Proof of Work” (PoW) algorithm. The Nakamoto
consensus begins with miners selecting pending transactions from apool, bundling them into a new block with a nonce. They compute theblock's hash to match the network's difficulty target, adjusting tomaintain a near 10-minute block interval. This process involves nonce
iterations to solve the challenge posed by the current difficulty level.
This process works as follows: Miners have packeted transactions ina block. The block contains a block header (as well as signed
transaction data and a transaction counter) which includes the version
number, the previous block’s hash, the Merkle root of all transactionsin the block, the timestamp, the difficulty target, and the “nonce”, The
nonce (number only used once) is an input variable that miners adjustin their attempt to find a block hash that meets the network's difficulty
target. Essentially, the nonce is a number that miners change witheach hashing attempt, allowing them to generate different hashes
from the same block data until they discover a hash below thedifficulty threshold, successfully mining a new block. Miners adjust
the nonce in the block header and repeatedly hash the header until
they find a hash that meets the difficulty target. This process isessentially trial and error, with the nonce serving as the variable23 of 32
component allowing for different hash outputs until the correct one isfound.
Through this process, miners solve for a hash that is less than orequal to the network's current difficulty target (mining). An acceptablehash is one that starts with a certain number of zeros, the exact countof which is dictated by the difficulty level. The difficulty adjusts toensure the average time between blocks remains around 10 minutes,
aiming for a balance between network security and processing
efficiency.
Once a valid nonce yielding an acceptable hash is discovered, theminer has the “proof of work” and broadcasts the block to the
network. Other nodes independently verify the block's transactions
and hash, ensuring it adheres to protocol rules (and that the miner has
done the work), including transaction signature validation and hashtarget compliance. Upon verification, nodes append the block to theirblockchain version.
Multiple chains can emerge when two miners solve the “puzzle”
nearly simultaneously, leading to two valid blocks. Nodes may receive
these blocks at different times due to network latency delaying blockpropagation, creating temporary divergences or "forks" in theblockchain as miners work on top of different blocks temporarily.
Forks in Bitcoin can also occur due to differences in node software
updates, leading to incompatibilities in block validation rules.
Additionally, network latency can delay block propagation, causing
nodes to work on different blocks temporarily. Users or miners
rejecting a block due to perceived flaws or deviations from theconsensus rules can further contribute to the creation of forks. This
selective acceptance can lead to temporary forks as different parts of
the network wait for a block they agree upon, highlighting the role of
network consensus in determining the blockchain's state.
The network resolves this by extending the chain that receives thenext block first, as miners generally work on the longest available
chain. Over time, the chain with the most accumulated work, typicallythe one extended first (although it can also be another one if the
majority of the users choose to reject certain blocks for otherreasons), becomes accepted by the network as the definitivetransaction history (and the other chain is abandoned, or "orphaned”).
This process ensures that despite temporary forks, a single,
agreed-upon chain prevails, reinforcing the security anddecentralisation of Bitcoin.
Finality in Bitcoin, or the assurance that transactions cannot bealtered, is probabilistically achieved as more blocks are added atop atransaction. Generally, six confirmations (approximately one hour) are24 of 32
considered sufficient to attain a high degree of finality, significantly
reducing the risk of transaction reversal due to chain reorganisations.
This mechanism secures the network against double-spending andconfirms transaction authenticity without central oversight, as nodes
recognise the most worked-on chain as the accurate transaction
history, establishing trust and consistency in the decentralised
network. The whole process of mining, broadcasting, independent
verification, decentralised selection which block to build on, and thelongest-chain rule is called Nakamoto consensus, with proof of work
being one of its key components during the mining and verification
steps.
H.5

Incentive
Mechanisms
and Applicable
Fees

The incentive to secure transactions refers to the incentives for miners
and for user nodes. Miners are incentivised to mine, a very costly
activity, via “block rewards”: a reward assigned to the miner that finds
the right nonce (and that is honest and lucky enough to be working in
the longest chain).
Block rewards have two components, the block subsidy andtransaction fees. Transaction fees are not predetermined. Users thatwish to send a bitcoin transaction to the transaction pool decide bythemselves the size of the payment that the miner who selects theirtransaction (and is successful to find the right nonce afterwards) will
receive – and are even free to set the transaction fee to zero.
However, miners are also free to select the transactions that they
prefer, and will typically select higher paying transactions first.
Because block space is scarce, this creates a market for block space,
where the price of block space, i.e. transaction fees, is determined bysupply and demand.
The Bitcoin network needs to achieve “critical mass” for transaction
fees to be sufficient to incentivise sufficient mining activity to keep the
network functional and secure. Hence, there are network effects atplay: demand for block space depends on demand for Bitcoin usage;
however, demand for Bitcoin usage depends in turn on network
security (which depends on mining activity) as well as on the passageof time. To avoid a negative feedback loop, kickstart the network andenable it to achieve the necessary network effects and maturity to be
self-sustaining, the block subsidy is implemented as a temporary
measure (and the only mechanism to bring new bitcoin into
existence). However, as the network matures, the subsidy becomesless necessary. For this reason, the protocol includes the decreasing
subsidy schedule marked by the halvings described above, which
also acts as a supply limitation mechanism that allows bitcoin to offer
protection against debasement. Hence the incentives seek toincentivise early mining participation while controlling inflation.

25 of 32
This incentive system is underpinned by game theory, ensuring
miners act in the network's best interest. The costly proof of workrequired to mine blocks means that any attempt to undermine the
network, such as by validating fraudulent transactions, would result in
substantial losses for a miner in terms of wasted computational
resources and foregone legitimate rewards. As a result, miners are
economically motivated to maintain the network's integrity, with theconsensus mechanism ensuring that only the longest chain of blocks,
representing the majority computational effort, is accepted as true.
This aligns individual miners' incentives with the collective goal of
securing the Bitcoin network.
User nodes, or full nodes, perform transaction verification out of acommitment to maintain the network's integrity and security. Whilethey don't receive direct financial incentives like miners, their role
upholds the decentralised ethos of Bitcoin, ensuring transactions arevalid and the blockchain remains accurate and resistant to attacks.
Their incentive may be ideological, to support a secure, decentralised
currency system, and/or practical, as it ensures their own transactions
and those they rely on are accurately processed and recorded.
H.6

Use ofDistributed
LedgerTechnology

false5

H.7

DLT
Functionality
Description

n/a

H.8

Audit

false6

H.9

Audit outcomen/a5

There is no single third party operating the issuance, transfer, or storage of bitcoin. The entire set of bitcoinminers govern its issuance, the entire set of users govern its storage, and the entire set of miners and users
govern its transfer.
6

Bitcoin code has not undergone a formal audit, but this is not applicable as the code is public,
open-source and is constantly reviewed by the community.

26 of 32
Part I: Information on the risks

N

Field

Content

I.1

Offer-Related
Risks

Specific offerors or persons seeking admission to trading shouldelaborate on risks specific to the circumstances, but risks are more
reduced than in other crypto-asset projects because there is nocentral entity raising capital or making governance decisions, suchthat their financial sustainability or governance practices may havean impact on the public. As bitcoin is not an asset-referenced token,
there is no reserve of assets, financial risks or liabilities to be
managed. More generally however, Bitcoin network decentralisationand immutability, while offering many advantages, also presents
risks related to usability and consumer protection. Without a central
authority with the technical ability to reverse transactions, payments
made under duress or deceit, in error, or in violation of the law,cannot be un-done. A court may order a new transaction to be madeto refund or compensate an aggravated party, but the court does nothave the technical ability to execute its decision without access tothe private keys of the address at issue – a situation similar tophysical cash. These risks can be managed by relying on
intermediaries, especially regulated ones and with a capable
customer support service. However, in this case the purchaser is
exposed to the traditional risks of relying on third parties.

I.2

Issuer/ Offeror/
Admission Entity
Differentiation

true

I.3

Issuer-Related
Risks

Anyone can mine bitcoin, and hence there are no restrictions on who
can issue it, as long as they follow protocol rules and provide theproof of work. This means that sanctioned parties whose income
authorities seek to impair may not be prevented from engaging inthis activity if they have the hardware and electricity necessary tomine. The mining industry has been professionalised over the past
years and mining companies today are, usually, increasingly large,
regulated and listed – however “rogue states” that choose to mine
bitcoin are able to do so, and the bitcoin that they mine is fungible
with bitcoin mined by others.

I.4

Crypto-Assetsrelated Risks

1. Lack of underlying asset: Not being asset-referenced andnot having a cash flow to discount, the intrinsic value of a
bitcoin is hard to determine. While it is a protection against
debasement in the long term (assuming sustained demand27 of 32
for the asset), in the short term this can entail price volatility
for bitcoin.
2. Irreversibility of transactions: As explained before, theimmutability of the ledger has many strengths but also
introduces some risks related to payments in error, fraud, etc.
3. Privacy: Transaction details are publicly recorded on theblockchain, potentially exposing user activities. Although
bitcoin are fungible and addresses are pseudonymic, thetransparency and immutability of the entire history of bitcointransactions enables forensics and intelligence to be
developed that may allow tracing addresses to real world
identities.
4. Loss of private keys: This represents a significant risk, as it
results in the irreversible loss of access to Bitcoin holdings,
underscoring the importance of secure key management
practices.
5. Monetary sovereignty: By offering a protection against
debasement and confiscation, Bitcoin also presents a risk tomonetary sovereignty by the state, as individuals may choose
to transact on Bitcoin instead of state-issued currency.
6. Market Liquidity and Price Volatility: Bitcoin markets may
experience liquidity constraints and price volatility, leading topotential losses or market inefficiencies for investors andtraders.
I.5

Project
Implementation-Related Risks

I.6

TechnologyRelated Risks

The decentralised nature of Bitcoin presents challenges for network
development and upgrades. Achieving consensus for changes iscomplex, as it requires agreement across a diverse group ofparticipants. This can lead to potential forks, where the blockchain
diverges into separate paths, reflecting differing visions within thecommunity, possibly impacting the crypto-asset’s value. In addition,
reluctance to change by the community may lead to excessive
rigidities and adaptation problems to new market conditions or
technical developments, and conversely an excessive tendency tomodify protocol rules may affect the perceived immutability of the
protocol and hence of the underlying crypto-asset’s value.

1. Protocol Vulnerabilities: The Bitcoin protocol may bevulnerable to technical flaws or bugs, potentially leading to
network disruptions, security breaches, or manipulation.

28 of 32
2. Cybersecurity Threats: The Bitcoin network itself, Bitcoin
wallets, exchanges, and other infrastructure are susceptible
to cyberattacks, hacking attempts, and phishing scams,
posing risks of theft, fraud, or loss of funds.
3. Environmental Risk: Bitcoin mining consumes vast amountsof energy, also from non-renewable sources, contributing tocarbon emissions and exacerbating climate change.
Additionally, e-waste generated from obsolete mining
hardware may pose an environmental threat.
4. Scalability Challenges: The scalability of the Bitcoin network
may be limited by its consensus mechanism and block size,
leading to congestion, delays, and higher transaction fees
during periods of high demand and consequently the risk ofbeing leapfrogged by faster or cheaper architectures.
5. Decreasing Security Budget Risk: The security of the
network highly depends on the rewards paid out to miners in
the network. The rewards depend on transaction fees andblock subsidy, whereas in the past the block subsidy has
been the majority of miners’ earnings. As roughly every four
years the block subsidy halves, miners’ earnings could shrink
and increase risks of attacks.
6. Regulatory and Compliance Risks: Regulatory uncertainty
and evolving legal frameworks may pose challenges for
Bitcoin adoption and acceptance, leading to compliancerisks for businesses and individuals using or investing in
Bitcoin. This is particularly driven by the high energy
requirements by the Bitcoin network which has led toregulatory considerations in the past.

29 of 32
I.7

Mitigation
measures1. Protocol Vulnerabilities: Regular code reviews, security
audits, and protocol upgrades can help identify and address
vulnerabilities. Engaging with the open-source community forpeer review and collaboration can enhance the resilience of
the Bitcoin network.
2. Cybersecurity Threats: The lack of a central point of failure
mitigates the possibility of cyberattacks on the Bitcoin
network itself. Implementing robust cybersecurity measures,
including encryption, multi-factor authentication, and cold
storage solutions, can mitigate the risk of unauthorised
access and protect user assets. Education and awarenessprograms can also help users recognize and avoid common
security threats.
3. Environmental Risk: The Bitcoin mining community should
transition to renewable energy sources for mining operations,
implement proper carbon accounting practices, and invest in
responsible disposal and recycling of e-waste. Collaboration
between stakeholders and technological innovation towards
less environmentally harmful alternatives, e.g. to replacing
hazardous waste in hardware can also help to reduce theenvironmental impact of Bitcoin.
4. Scalability Challenges: Research and development efforts
focused on scalability solutions, such as the Lightning
Network or off-chain scaling solutions, aim to enhance thethroughput and efficiency of Bitcoin transactions. Investing ininfrastructure upgrades and network optimizations canimprove scalability and user experience over time. Ongoing
innovation by monitoring market trends and updating
functionality accordingly should be ensured.
5. Decreasing Security Budget Risk: An increase intransaction fees can render the network more resilient
against attacks and help miners to continue their businesses.
Potential other mitigation strategies such as issuing newcoins or re-issuing old coins are discussed controversially inthe community.
6. Regulatory and Compliance Risks: Engaging withregulators, policymakers, and industry associations to
advocate for clear and favourable regulatory frameworks canhelp reduce uncertainty and promote mainstream adoption of
Bitcoin. Implementing robust compliance programs, including
AML and KYC procedures, can mitigate regulatory risks and30 of 32
enhance trust and transparency in Bitcoin transactions.
Enhancing transparency on the energy consumption and
GHG emissions of mining companies in accordance with
commonly accepted carbon accounting frameworks such as
the GHG Protocol.

Part J: Information on the sustainability indicators in relation to adverse impact on the
climate and other environment-related adverse impacts
Mandatory information on principal adverse impacts on the climate and otherenvironment-related adverse impacts of the consensus mechanism

General information and key indicators
CCRI - Crypto Carbon Ratings Institute incorporated as CCRI GmbH in Dingolfing (Germany),
acting as sustainability data provider since no issuer or offeror can be identified for Bitcoin, is
providing information on principal adverse impacts on the climate and other environment-related
adverse impacts of the consensus mechanism used to validate transactions in Bitcoin (BTC) andto maintain the integrity of the distributed ledger of transactions.
The information covers the period from 01.01.2023 to 31.12.2023.
The validation of transactions in Bitcoin and the maintenance of the integrity of the distributed
ledger of transactions has led to a total energy consumption of 121,134,042.6 kWh during 2023.
The validation of one transaction in Bitcoin has led to a total energy consumption of 44.47 kWh on
average during 2023.
The validation of transactions in Bitcoin and the maintenance of the integrity of the distributed
ledger of transactions has resulted in 61,311,929.06 tonnes GHG emissions, calculated based on
sources owned or controlled by the DLT network nodes (scope 1), and indirect emissions fromenergy purchased by the DLT network nodes (scope 2), during 2023.

Features of the consensus mechanism relevant for principal adverse impacts on the climate
and other environment-related adverse impacts
See Part H: Information on the underlying technology

31 of 32

Climate and other environment-related indicators
1

EnergyGHGemissions

2

3

4

5

Adversesustainability
indicator

MetricSource ofinformation, review
by third parties, useof data providers or
external experts

Methodology to
calculate metrics
from informationand data
obtained

Energyconsumption

121,134,042.6
kWh

Provided by CCRI as
external party

See CCRI API
documentation

Non-renewableenergyconsumption

72.76%7

Provided by CCRI as
external party

See CCRI API
documentation

Energy intensity

44.47 kWh

Provided by CCRI as
external party

See CCRI API
documentation

Scope 1 –Controlled-

Provided by CCRI as
external party

See CCRI API
documentation

Scope 2 –Purchased

61,311,929.06
tCO2e8Provided by CCRI as
external party

See CCRI API
documentation

GHG intensity

21.92 kg/Tx

Provided by CCRI as
external party

See CCRI API
documentation

7

For reference, the non-renewable energy share of the US is at 80.20% and at 72.21% worldwide
according to IRENA (2023), Renewable Capacity Statistics 2023; & IRENA (2023), Renewable Energy
Statistics 2023, The International Renewable Energy Agency, Abu Dhabi. The share of the non-renewableenergy consumption is calculated based on mining location data provided by the Cambridge Center of
Alternative Finance (CCAF). The data has been last updated by CCAF in January 2022. As soon as more
up-to-date data becomes available, all affected indicators should be updated.
8

The scope 2 emissions have been calculated solely using country or state grid emission factors inaccordance with the location-based carbon accounting approach. According to the GHG Protocol, amarket-based accounting approach can be conducted in addition if renewable energy claims can beverified. As soon as verifiable renewable energy claims become available on a large scale, scope 2 emission
for the Bitcoin network can be added for comparison.

32 of 32
Waste
production

Naturalresources

Generation ofwaste electricaland electronicequipment(WEEE)

10,350 t

Provided by CCRI as
external party

See CCRI API
documentation

Non-recycled
WEEE ratio

84.75%

Provided by CCRI as
external party

See CCRI API
documentation

Generation of
hazardous
waste

122 t

Provided by CCRI as
external party

See CCRI API
documentation

Impact of theuse ofequipment on
naturalresources

The impact onnatural resources,
such as water, islargely driven by
the magnitude ofthe electricity
consumed by the
network and therelatedequipment. The
annual water
footprint isestimated at
1,909 gigalitres.

Provided by CCRI as
external party

See CCRI API
documentation