Bitcoin has been getting a lot of attention lately. Since its inception, bitcoin miners, let alone investors have increased daily. However, what happens when all the bitcoin has been mined?
As of January 23 this year, 19,276,325 bitcoins had already been mined. This leaves approximately 1.7 million bitcoins for miners. What makes bitcoin more interesting is its scarcity in supply. The mystery man behind bitcoin designed bitcoin with a cap of 21 million to control its production. From an economic point of view, this limits supply, therefore, increasing demand for the new digital gold.
Now, it takes approximately 10 minutes for a new bitcoin block to be added to the crypto market. By design, the number of bitcoins minted per block is capped at 50% after every 210,000 blocks or once every four years. Interesting, right?
Will Bitcoin Top 21 Million?
No, the number of bitcoins will never reach 21 million. Many will differ, but hear me out. It is so because the bitcoin network employs bit-shift operators, arithmetic operators that round some decimal points down to the closest integer. Still, bitcoin numbers will always increase at approximately 6% per year, with the total number of bitcoins that can ever be mined being 21 million, as per its founder, Satoshi.
Yet, the rate at which new bitcoins are created will decrease over time due to the halving events occurring approximately every four years. During these events, the block rewards given to miners for adding new blocks to the blockchain are cut in half, which reduces the rate at which new bitcoins are created and helps to maintain it at controlled level. Typically, a predictable inflation rate with the last bitcoin will be mined in 2140.
Bitcoin Mining Reward Halving
With the current mining reward system, this number will take about 100 years to reach. Even so, once all 21 million bitcoins are mined, the reward for mining will drop to zero, barring the creation of new bitcoins.
The current reward for mining a block is 6.2 BTC or around $24,000 at today’s exchange rates (February 2023). This reward halves every 210,000 blocks or approximately every four years until all 21 million BTC have been mined by 2040-2050. After that point, no newer BTC will be created, and miners will only receive transaction fees as compensation for their work maintaining the network infrastructure.
What Next After All the Bitcoins Are Mined?
Will bitcoin be as valuable as pocket change or bars of gold in 2140? We can only speculate. It’s worth noting that once all 21 million bitcoins have been mined, miners will no longer receive block rewards for verifying transactions. This means transaction fees will be the only incentive. Currently, they’re not as significant as block rewards, but transaction fees will become more important to miners as they dwindle.
That said, there are other potential avenues for miners to earn money. The value of bitcoin may keep rising, making mining worthwhile even without block rewards. Even more, miners could offer services related to bitcoin, like running nodes or providing liquidity. The picture isn’t quite clear after all bitcoins have been mined, but it’s likely to be a chary shift that opens up new opportunities for the bitcoin ecosystem.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
