Discover what will happen to Bitcoin once all 21 million coins are mined. How does this affect S19 AISC miners?
Bitcoins have a maximum supply of 21 million. That’s it; no more Bitcoins will be produced after they have all been mined, which is expected to happen in or around 2140.
Only a predetermined number of new Bitcoin can be mined annually until a total of 21 million coins have been produced. This is because the controlled supply model that underpins the Bitcoin blockchain was developed.
The network will largely continue to function as it does now once all 21 million BTC have been mined, but there will be one significant change for miners.
This blog post will examine the implications and conceivable futures for Bitcoin after the last coin is mined.
Table of Contents
Why is Bitcoin’s Supply Limited?
At least a few ways distinguish Bitcoin from gold. It has a requirement that it must have a finite supply built into its source code, so both Bitcoin and gold are scarce resources. This is why there can never be more than 21 million Bitcoin in circulation.
Bitcoin cannot be created out of thin air either, just like gold. Extracting it is labor-intensive. The main distinction is that, as opposed to being physically mined from the earth, bitcoins are obtained through computational methods.
Complex mathematical equations must be solved in order to mine bitcoin. These equations are cryptographic, and each problem’s solution depends on one alphanumeric string known as the target hash. The beginning of a target hash is a series of zeros, and the letters and numbers that follow are illogically chosen, for example., 00000000000000006FCAq…
Extremely powerful hardware made just for Bitcoin mining is necessary. Antminer S19 series ASICs from Bitmain are the most powerful Bitcoin miners on today’s market. When ASIC miners find the linking target hash using the aforementioned equations, the miner is rewarded with a Bitcoin block reward; however, more on these and their significance to the Bitcoin network will be discussed shortly.
Will the Number of Bitcoins Ever Reach 21 Million?
There won’t likely be 21 million bitcoins issued in total. That’s because the Bitcoin network uses bit-shift operators—arithmetic operators that round some decimal points down to the closest smallest integer.
This rounding down may occur when the block reward for producing a new Bitcoin block is divided in half, and the amount of the new reward is calculated. That reward can be expressed in satoshis, with one satoshi equaling 0.00000001 bitcoins.2 It is impossible to divide a satoshi in half because it is the smallest unit of measurement in the Bitcoin network. The Bitcoin blockchain, when tasked with splitting a satoshi in half to calculate a new reward amount, is programmed—using bit-shift operators—to round down to the nearest whole integer.3 The total number of bitcoins issued is probably going to come in a little under 21 million due to this systematic rounding down of Bitcoin block rewards, in fractions of satoshis.
As of January 2023, 19.3 million bitcoins have already been issued, with about 1.7 million bitcoins still to be released.
The last bitcoin (actually the last satoshi) isn’t expected to be created until the year 2140 because the number of new bitcoins issued per block is roughly halved every four years. The number of new bitcoins minted per block was 50 when Bitcoin was first established, and has since decreased to 6.25 as of May 2020—the next halving to 3.125 is expected sometime in 2024.3
There is a cap of 21 million bitcoins that can be created, but it’s very likely that the actual number of bitcoins in circulation is much lower. Owners of bitcoins may lose access to their funds in a variety of ways, such as if they misplace their wallets’ private keys or pass away without disclosing their credentials. Up to 20% of the Bitcoin that has already been issued could be lost forever, according to a Chainalysis study from June 2020.
When Will All Bitcoins Be Mined?
Satoshi Nakamoto made a one-sided offer to anyone willing to carry out his agreement to distribute them in the Bitcoin V.0.1 release announcement. Miners would be compensated with Bitcoins and transaction fees as long as they complied with the rules of Bitcoin by processing transactions and assisting in network security.
The rate at which miners would be paid in Bitcoins was specified in the Bitcoin whitepaper, which also stated that until all Bitcoins were mined, the rate would be cut in half every four years. According to its findings, transaction fees could take the place of the reward system once Bitcoin’s supply ran out.
For every new block found at the time Bitcoin was first introduced, miners received a reward of 50 Bitcoins. This was cut in half in 2012 to 25 Bitcoins, and then again in 2016 to 12.5 Bitcoins.
Miners will receive 6.25 Bitcoins for each new block starting in 2021. The Bitcoin mining reward will only be 3.125 Bitcoins per block in 2024, though. The last Bitcoin won’t be mined until around 2140 at this rate, with the block reward for Bitcoin decreasing after every 210,000 blocks.
However, peculiarly enough, it is unlikely that Bitcoin will ever reach the nice round number of precisely 21 million due to quirks in the Bitcoin network and how it rounds numbers. It’s likely that Bitcoin will fall a few decimal places short of the exact number when it reaches 21,000,000.
What Will Happen to Miners Once All 21 Bitcoins Are Mined?
The majority of Bitcoin users and enthusiasts are concerned about Bitcoin’s finite supply of 21 million and the network’s dependence on miners to operate. This is primarily because Bitcoin rewards are miners’ primary incentive to serve as verifying nodes.
In the Bitcoin announcement release, Satoshi already offered a solution to the issue. As previously mentioned, the reward system will only use transaction fees once there is no more Bitcoin supply. The fact that Bitcoin miners currently receive transaction fees in addition to any block mining rewards helps explain why Bitcoin is so popular. Additionally, it promotes the safety of the Bitcoin network.
To make up for some of the money lost when the block reward phase comes to an end, Bitcoin miners may decide to raise transaction fees once all 21 million Bitcoins have been created. However, that doesn’t fully acknowledge the fact that the Bitcoin block reward will have decreased by that point. If Bitcoin keeps halving in increments of half, the price will fall to 0.78125 in 2032 and to 0.390625 in 2036 if the current rate of halving is maintained.
As a result, the value of the Bitcoin block reward will significantly decline in value unless the price of Bitcoin rises, which many believe will happen given the increased scarcity of newly mined Bitcoin.
Miners will still be motivated to support the network long after Bitcoin’s supply runs out, even if it has a limited supply. Transaction fees already serve as a form of compensation for miners in addition to Bitcoins.
Currently, transaction fees only account for about 6% of a miner’s income. However, before the Bitcoin network reaches its supply limit, it is anticipated that transaction fee returns will rise exponentially.
Before the last bitcoin is mined, the incentive for miners to support the network will probably gradually shift toward transaction fees.
Conclusion: What Will Happen When All 21 Million Bitcoins Are Mined?
Unfortunately, many of us will not be alive in the year 2140 to experience what happens when the last Bitcoin is mined. But given how engaged and proactive the Bitcoin community is, you might assume a strong replacement is already in place, most likely in the form of the above-mentioned revised transaction fee system.
It is pointless to fret right now about when the final Bitcoin block reward will be paid out. Before then, there are probably going to be changes to Bitcoin, the Bitcoin network, and the entire crypto industry, so nobody can really predict what will happen.
How Many Bitcoins Have Been Mined?
With about 1.7 million bitcoins still to be released as of January 2023, 19.39 million bitcoins have already been mined. There are only 21 million bitcoin available in total.
How Long Does It Take to Mine One Bitcoin?
The block reward, or the number of additional bitcoins given to crypto miners in exchange for creating a new block, determines how long it takes to mine one bitcoin. Every 10 minutes or so, a new block is generated, with the current block reward being 6.25 bitcoins. As a result, 625 bitcoin are created every minute. 0.3125 bitcoins will be mined every minute when the reward is cut in half in 2024.
What Happens to Mining Fees When Bitcoin’s Supply Limit is Reached?
When there are 21 million bitcoins available, mining fees for bitcoins will cease to exist. After that, transaction processing fees are likely to be miners’ only source of income as opposed to block rewards and transaction fees combined.