In August 2022, records showed that the number of Bitcoins on the market was around 19,124,681, leaving only 1,875,319 in the blockchain system to be mined. When Satoshi Nakamoto first created it in 2009, the number of Bitcoins was limited to 21 million coins in the hope that the price will soar like gold if the amount was finite. Meanwhile, now a Bitcoin is mined every 10 minutes. The question is, what happens when all Bitcoins are mined? Will the price soar or vice versa? Let’s discuss that question thoroughly in this article!
Will the number of Bitcoins reach 21 million?
The number of Bitcoins on the market is rumoured not to reach 21 million. The Bitcoin network uses a bit-shift operator, an arithmetic operator that rounds several decimal points down to the smallest integer. This rounding occurs when the block reward that produces a new Bitcoin block gets split in half and the new reward amount is recalculated. The reward amount, referred to as a satoshi, represents 0.00000001 bitcoins. Since Satoshis are the smallest amount in the Bitcoin network’s calculations, they cannot be subdivided into two. When tasked with dividing satoshis in half to calculate a new reward amount, Bitcoin’s blockchain is programmed, using the bit-shift operator, to round down to the nearest integer. This systematic rounding of Bitcoin block reward calculations into fractions of satoshis is why the total number of bitcoins issued will likely be slightly less than 21 million.
With Bitcoin halving, the amount of Bitcoin generated from each block will decrease every four years. With this fact, Bitcoin is calculated to be mined out by 2140. The amount of Bitcoin mined from each block was 50 coins when it was first launched and has now decreased to 6.25 coins from each block created.
Even if 21 million Bitcoins are mined, the number of Bitcoins in circulation will likely remain below that number. Bitcoin owners can lose access to their Bitcoin when they lose their private key. Chainanalysis published research explaining that 20% of existing Bitcoin is rumoured to have been permanently lost in 2020. Approximately how much Bitcoin has been lost in 2022?
What Happens After All 21 Million Bitcoins Are Mined?
Once the maximum amount of Bitcoin is mined, the number will remain below 21 million BTC and no new coins will be generated. However, Bitcoin transactions will continue to run and be processed. It’s just that miners are now no longer rewarded with newly minted Bitcoin. Miners will be rewarded with transaction fees that occur within the Bitcoin network. For this reason, the exhaustion of mined Bitcoin will affect the miner’s work. But all effects will also depend on how Bitcoin will develop in the future. If in 2140, the Bitcoin network is still working and carrying out transactions, then the miners will still benefit.
What Happens to Mining Fees When the Bitcoin Supply Limit is Reached?
If Bitcoin runs out in 2140, mining fees will disappear; miners will only benefit from transaction fees, as described above. Then, suppose Bitcoin has evolved into a store of value over time rather than a means of everyday payment. In that case, miners will still profit even though the number of transactions decreases. Miners can set a high price for the fees of large transactions or opt for a system of paying for many transactions at once.
However, a negative outcome can occur if block rewards disappear completely in the future, which is the emergence of a miner cartel. A group of miners will try to dominate and control the mining resources and set high fees for each transaction.
Conclusion
Will Bitcoin’s functionality change in 2140 when all coins are mined? Clearly, the Bitcoin network ecosystem is still evolving, allowing for positive development in the future. But in the absence of new Bitcoins to mine, miners will have the most leverage in making profits. However, the same can happen to Bitcoin investors. Everything depends on the future evolution of Bitcoin.
