The 21,000,000th bitcoin, which is the final bitcoin, is expected to be mined sometime around the year 2140. When this takes place, no major changes to the Bitcoin network will be recorded. However, during that time, bitcoin miners will no longer earn block rewards in the form of newly minted bitcoins.
So what happens when all of bitcoin is mined? Will bitcoin mining become less profitable? Will the network crash?
Not exactly. Miners will still be rewarded when all bitcoins are mined. The only difference is this: During that time, all miners will receive their rewards in the form of transaction fees only.
The total bitcoins mined so far are calculated to be almost 90 percent of the whole supply. Due to this reason, the questions below are brought to the fore:
- Why is Bitcoin’s Supply Limited to Only 21 Million?
- How Often is Bitcoin Released?
- When Will Bitcoin Run Out of Supply?
- How Many Bitcoins Have Been Mined?
- What Happens to Bitcoin if Miners Stop?
- What is Selfish Mining in Bitcoin?
- Should I Worry About What Happens When All Bitcoins Are Mined?
Why is Bitcoin’s Supply Only 21 Million?
The Bitcoin network, which is the blockchain for bitcoin, was created by Satoshi Nakamoto. This pseudonymous figure designed the network in a manner that allows only a specific number of bitcoins to be mined each year until a total number of 21 million bitcoins have been minted
The limited supply of this virtual currency is an integral part of its existence. Among other reasons, it was done to ensure that bitcoin turns out to be a currency that is without inflation. The fact that bitcoin does not have a limitless supply would make it a scarce and more attractive asset to investors and potential bitcoin users in the future. The value of bitcoin is envisaged to increase over time because the concept of more demand and less supply will come into play; as the currency’s popularity builds up, more and more people would desire to invest in it.
How Often is Bitcoin Released?
A specific number of new bitcoins are released into circulation each time a block is mined. Approximately every 10 minutes, one block of bitcoin transactions is added to the blockchain by bitcoin miners. Currently, 6.25 BTC is generated each time a block of transactions is confirmed.
Bitcoins are released gradually, in a predictable and decreasing manner, so as not to overwhelm the market with all 21 million bitcoins at once. The next paragraphs will explain better.
When Will Bitcoin Run Out?
At the onset of this article, it was stated that the last bitcoin will not be minted until sometime around the year 2140. This is because the Bitcoin network was designed in a way that reduces, by half, the rate at which new bitcoins are mined after a specific period of time.
The reward received by bitcoin miners in return for mining bitcoin is reduced by half after every 210 thousand new blocks. This event is called halving and is achieved approximately once every four years.
For example, at the launch of the virtual currency, the reward for bitcoin miners was 50 bitcoins per block. Four years later, the reward was reduced, in half, to 25 BTC per new block. The halving process was repeated again after another four years. Now, in 2022, the reward has significantly decreased to 6.25 BTC per bitcoin block.
The block reward earned by bitcoin miners is equivalent to the number of bitcoins generated per block. 6.25 BTC is currently released approximately every 10 minutes. This means that an estimated value of 900 bitcoins are mined per day.
New bitcoins are mined at a predictable and decreasing rate. The most recent halving took place in 2020. The next halving is expected to occur four years after 2020, that is, sometime in the year 2024. When the next halving takes place, 3.125 BTC will be released roughly every 10 minutes. The cycle will go on and on until there is no bitcoin left to mine. Needless to say, the value of bitcoin will also continue to increase as time goes on.
So, when will bitcoin run out of supply? Simply put, bitcoin, as a digital asset, is expected to run out when the total supply limit is reached. Based on the halving rule and the rate at which bitcoins are currently mined, bitcoin will reach its 21 million supply limit sometime around the year 2140.
How Many Bitcoins Have Been Mined?
Out of the limited supply of 21 million bitcoins, the total bitcoin mined to date is equal to almost 19 million. Bitcoin miners will continue to receive rewards in the form of newly minted bitcoins each time they add a new block to the blockchain until this hard cap on supply is reached.
As the above chart shows, the percentage of bitcoins mined so far is about 90% of the total number that would ever exist. If almost 19 million bitcoins are now in existence as of 2022, it means that only a little over two million bitcoins will be mined in the future. Compared to the number of bitcoins that have already been mined, the over two million bitcoins left to mine can be said to be a small amount. Even at that, this seemingly minute figure will take the most time to be mined.
Why is that so? Again, the amount of bitcoin released into circulation reduces significantly as time passes. The rate at which this digital currency is minted is cut in half (that is, reduced by 50%) after every four years.
What Happens to Bitcoin if Miners Stop?
First of all, what does bitcoin mining entail? Bitcoin mining is a decentralized and ambitious process through which new bitcoins are generated or released. Individuals who mine bitcoin are referred to as bitcoin miners. These miners verify, validate and confirm new bitcoin transactions. The transactions are then added to the Bitcoin blockchain as blocks. Bitcoin blocks are a collection of bitcoin transactions. Each block has a size of 1MB.
Now, what will happen to bitcoin if miners stop their services? If all bitcoin miners stop mining, the Bitcoin network will be greatly affected. Although bitcoin users will still have access to their wallets and be able to view all the bitcoin transactions on the blockchain, it will be entirely impossible to spend, buy or sell bitcoin. This is because all bitcoin transactions can only be validated through mining. Hence, the role of miners is an essential aspect of how Bitcoin works.
What is currently being obtained is that bitcoin miners earn a combination of block rewards and transaction fees for their computational efforts. However, when the 21 million limit on bitcoin supply is reached, miners will no longer earn newly minted bitcoins, in addition to transaction fees, in exchange for their mining services. Instead, their rewards will most likely be based solely on numerous bitcoin transaction fees paid by users.
Wouldn’t this event create a doomsday scenario for Bitcoin? No. If many people decide to make transactions with bitcoin during that time, there will be a great number of transactions to be processed and added to the Bitcoin blockchain. This will help bitcoin miners gain profits from transaction fees. On the other hand, if there are not many bitcoin transactions to be verified, a number of negative impacts on the Bitcoin network might be felt.
One such negative strategy that might ensue is known as selfish mining.
Selfish Mining in Bitcoin
Selfish mining in Bitcoin is a fraudulent strategy that can be adopted by a miner or group of miners in order to alter the Bitcoin blockchain and earn more transaction fees.
How does selfish mining work? A miner might choose to hide or withhold a discovered block of transactions for a while instead of adding it to the blockchain immediately. This is done so as to trick the Bitcoin network into wasting resources to mine additional blocks before the miner eventually introduces the previously discovered block to the blockchain at a later time.
How is Bitcoin affected? Although block rewards involve a fixed amount of bitcoin, transaction fees vary, based on how long it takes a block to get verified and validated. This implies that the longer the verification period, the higher the transaction fee. So, in order to receive higher transaction fees, a ‘selfish miner’ might go in with the selfish mining strategy.
Should I Worry About What Happens When All Bitcoins Are Mined?
Definitely not. It is not in the place of anyone to worry about what will happen when all 21 million bitcoins are mined. The fact that the block rewards reduce gradually as time goes on instead of stopping all at once makes it possible for bitcoin miners to acclimate themselves to relying more on transaction fees than minted bitcoins.
Another reason why it is not necessary to worry about bitcoin getting to its maximum supply limit is that 2140 is still a very long time from now. We live in a dynamic and ever-changing world where anything can happen just with the snap of a finger. Between now and then, so many events that could make bitcoin’s hard cap less of a worry might take place.
An interesting fact to note is that even though it is said that the last bitcoin will be mined sometime around 2140, the total supply of bitcoins that would be in circulation at that time would not be up to 21 million. Even now, not all bitcoins mined to date are in circulation. This is because some bitcoins have already been lost. Their users can no longer gain access to their wallets.
Some wallets’ private keys have been misplaced while some hardware wallets have been destroyed or lost. Still, some bitcoins have been lost because their users are no longer alive and nobody else knows the private keys to the wallets. These bitcoins are unrecoverable and will likely remain permanently inaccessible, thereby affecting the total (present and future) supply of bitcoins in circulation. For now, this factor has no negative impact on the value of bitcoin.
It is difficult to accurately predict what will happen when bitcoin’s supply runs out as the possibilities seem endless. But two things are certain. The first is that when the maximum supply limit is reached, new bitcoins will no longer be minted. Secondly, transaction fees will become the primary source of revenue for bitcoin miners when all 21 million bitcoins have been mined.
It has been established that the supply of Bitcoin is not everlasting. Bitcoin miners will stop generating bitcoins once all 21 million bitcoins have been mined into existence. No new bitcoin will be issued nor will bitcoin mining rewards be received by miners. In Bitcoin, mining is a key aspect because, without it, no transactions can take place. That being said, new bitcoin transactions will continue to be bound into blocks, processed, and verified as long as miners stay on course. These miners will then receive transaction fees as rewards for their services.
This article discussed the halving process and how it relates to Bitcoin. 6.25 BTC will not endlessly be released approximately every ten minutes. The halving rule makes it possible for this current block reward to be reduced in half sometime around 2024 since the last halving took place in 2020. The process will continue to be repeated roughly every four years until all bitcoins have been mined.
In a nutshell, bitcoin reaching its supply limit will not provide a dead-end for the miners, the users, and the blockchain itself. The network is possibly going to adapt to the new changes when they come and simply move on.