What Happens When All the Bitcoin in the World Has Been Mined?
Thousands of cryptocurrencies have started to emerge in the past years, but Bitcoin (BTC) still stands as the most dominant coin since its birth in 2009. After more than a decade of existence in the fintech industry, many individuals and institutions have begun to explore Bitcoin’s highly innovative and unique functions for everyday living.
This digital asset is often compared to the leading commodity, gold, because of many similarities in terms of features. Say, for example, both assets have a monetary feature and are used to store value. Wall Street even considers the two as “alternative investments.” While Bitcoin and gold run in different processes, both can be verified easily. Among the most notable similarities of these assets is that they have a limited supply and are acquired through a process called mining.
A quick look at Bitcoin mining
While gold and other precious metals are generally acquired by digging underground, Bitcoin mining is done digitally. This process is operated by individuals, called Bitcoin miners, who secure the entire network and process transactions using high-powered equipment and software specially designed to run the mining procedures.
While miners of gold and other valuable metals break rocks like quartz in search of these precious stones, Bitcoin miners crack very complex mathematical equations to get rewards in Bitcoin. Unlike gold that is hidden in hard and sturdy materials, Bitcoin lies hidden inside data blocks, which are mined using a unique algorithm developed by Satoshi Nakamoto, its pseudonymous creator.
How many Bitcoins are there?
Aside from the similarity in the acquisition process, gold and BTC are also considered scarce assets because of having a limited supply. While gold has an unidentified number of tons as a limit, there are only 21 million Bitcoins that can be mined and used. Now, you might ask, “Why is Bitcoin capped at 21 million?” Some articles say that Nakamoto intended the unit prices of BTC to “eventually align with traditional fiat currencies.” Setting a limit also gives Bitcoin anti-inflationary properties.
As of the time of writing, Bitcoin sells at over 37,000 USD and has a market capitalization of 711 billion USD. If you’ve been in the crypto space for quite some time now, you’ve probably witnessed how Bitcoin price started from almost nothing to around 65,000 USD—its current all-time high—in April 2021.
One of the many factors behind this spike is the crypto “whales” which can be individuals or groups of people who hold the majority of the coins. Often, these “whales” use the huge amount of crypto they hold as their power to manipulate the said coin’s value, which, in turn, results in volatility or price fluctuations. However, no one can surely tell how mining all BTC can affect them. They can either gain more influence or lose their leverage at some point.
As we’ve mentioned earlier, Bitcoin’s maximum supply is 21,000,000 BTC. This supply limit is also a factor for this digital asset’s highly fluctuating price. If you’re wondering about how many Bitcoins have been mined, BTC’s circulating supply is now at 18,737,550. This only means that only over 2,200,000 BTC are left before it reaches its limit. Now, the question is, “What happens when there is no more Bitcoin left to mine?”
What happens when supply runs out?
This might be a thrilling event for all the Bitcoin enthusiasts out there. Once miners have generated all coins, there will be no more BTC available for mining. Having additional supply will only be possible if Bitcoin’s protocol is altered and allows a more abundant supply. But after many years of being in the crypto market’s limelight, there weren’t any confirmed plans to increase Bitcoin’s maximum cap. With that, it’s safe to assume that its supply limit will remain at 21 million BTC.
Bitcoin’s supply is nearing its limit, so what possible effects can users face? Here are some notable implications of reaching Bitcoin’s supply cap.
Impact on miners
The process of mining Bitcoin allows miners to gain rewards for every successful block verified in the network. Miners get two types of rewards from mining—a portion of BTC for every confirmed block and incentives that come from transaction fees, which are paid to the miners in exchange for their efforts in processing and verifying each transaction.
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Higher fees allow miners to gain higher incentives. This is also their basis for prioritizing a transaction in the network. The higher the transaction fee you pay, the faster it is for your transaction to be included in a block.
When all Bitcoin has been mined, the miners will no longer receive block rewards since there are no more coins to be generated. They will only earn from the transaction fees to be collected from every confirmed transaction. Miners can continue securing the network since they will still earn from the said fees. However, it is not sure if these fees will be enough for miners to provide sufficient resources for them.
Another notable thing that greatly affects the rewards received by the miners is an event called Bitcoin halving, which happens after a set of 210,000 blocks are mined or roughly after every four years. In the early years of BTC, miners received 50 BTC for every block they verified. After the first set of 210,000 blocks was mined in 2012, miners were rewarded with 25 BTC. This continued until the recent Bitcoin halving in 2020, leaving miners with a 6.25 BTC reward per block.
Impact on Bitcoin mining and its network
Bitcoin’s price increase also implies an increase in miner’s transaction fees. Currently, the average fee for every Bitcoin transaction is 5 USD. Note that this fee was only at 1.40 USD last year, meaning this price can continue to spike in some events like a crypto boom.
While this might be considered a piece of good news for Bitcoin miners, there is no assurance that the cost of the mining process will remain high in the years to come. No one can tell the future of Bitcoin’s technology and how it will work in the near future.
If the mining process further develops and improves to the point where it is easy and cheap, this process can also be turned into another business. On the other hand, Bitcoin mining is a process that many jurisdictions consider to have an adverse effect on the environment due to its high energy consumption level. If Bitcoin mining’s energy efficiency improves in the future, miners can consider securing the network and stay in business.
Impact on market price and investment
How much Bitcoin is left? As we’ve previously mentioned, only about 2.2 million BTC is waiting to be mined. When all these have been generated, Bitcoin’s supply will be scarce, which could eventually lead to an increase in price.
For investors, this may be great news since Bitcoin is a highly volatile asset—with extreme price gains and dramatic falls. This could possibly be an excellent opportunity for aspiring investors to enter the market and try out investing.
When will Bitcoin run out?
Guessing when Bitcoin reaches its maximum limit can be tricky. But some crypto geeks say that if Bitcoin’s mining power remains the same as when the first block was mined, the last BTC can be mined by October 8, 2140. Others also say if Bitcoin is still used as a currency and continues to serve functions similar to fiat money, there’s a possibility that it will be highly stabilized.
Being the most popular and leading virtual asset over thousands of others, BTC will be remembered as the asset that cannot be dethroned—not only in terms of market capitalization and price but also for its excellent contribution to improving the state of today’s financial system.