Bitcoin: What’s Beyond Its Total Mine?

Bitcoin is like digital gold in many ways. Like gold, bitcoin cannot simply be created arbitrarily; it requires work to "extract". While gold must be extracted from the physical earth, bitcoin must be "mined" via computational means.

For this reason, there will only be 21 million bitcoins ever produced. On average, these bitcoins are introduced to the bitcoin supply at a fixed rate of one block every ten minutes. In addition, the amount of bitcoin released in each of these blocks is reduced by 50% every four years. Currently, around 18.5 million bitcoin have been mined. This leaves less than three million that have yet to be introduced into circulation.

 

Source: https://cryptocurrencynews.com

 

The first 18.5 million bitcoin were mined ten years since the initial launch of the bitcoin network. With only three million more coins to go, it might appear like we are in the final stages of bitcoin mining. This is true but in a limited sense. The timeline is more complicated than that.

The bitcoin mining process rewards miners with a chunk of bitcoin upon successful verification of a block. This process adapts over time. When bitcoin first launched, the reward was 50 bitcoin. In 2012, it halved to 25 bitcoin. In 2016, it halved again to 12.5 bitcoin. On May 11, 2020, the reward halved again to 6.25 bitcoin. This effectively lowers Bitcoin's inflation rate in half every four years.

The reward will continue to halve every four years until the final bitcoin has been mined. The final bitcoin is unlikely to be mined until around the year 2140. However, it's possible the bitcoin network protocol will be changed between now and then.

But even when the last bitcoin has been produced, miners will likely continue to actively and competitively participate and validate new transactions. The reason is that every bitcoin transaction has a transaction fee attached to it. These fees, while today representing a few hundred dollars per block, could potentially rise to many thousands of dollars per block, especially as the number of transactions on the blockchain grows and as the price of a bitcoin rises. Ultimately, it will function like a closed economy, where transaction fees are assessed much like taxes.

 

Key takeaways:

• There are only 21 million bitcoins that can be mined in total.
• Once bitcoin miners have unlocked all the bitcoins, the planet's supply will essentially be tapped out.
• Currently, around 18.5 million bitcoin have been mined; this leaves less than three million that have yet to be introduced into circulation.
• Once all Bitcoin has been mined the miners will still be incentivized to process transactions with fees.

It's also important to keep in mind that the bitcoin network itself is likely to change significantly between now and 2140. Considering how much has happened to bitcoin in just a decade, new protocols, new methods of recording and processing transactions, and any number of other factors may impact the mining process.

 

Reference:

What happens to Bitcoin after all 21 million are mined? Adam Hayes, Investopedia