Bitcoin has been slowly but steadily gaining popularity over the course of time since 2009 when it got invented. Already 19 million bitcoins are in circulation out of the proposed 21 million with complete supply coming into play by 2140. This perplexes us with the most evident question: “What if all bitcoins are mined and there aren’t any more available for supply?”
Considering the fact that with less than 2 million bitcoins left to be mined, what will be the underlying future for people when all those are out. As of June 2022, 19.7 million bitcoins are available for all, while still 1.92 million to be mined. The reason bitcoins have been introduced in the circulation supply via bitcoin halving every four years, is Satoshi’s dream of a virtual currency he saw in 2008, to ensure it is more valuable than the inflation rate over years, something unaffected by the inflation rate.
This could only be made possible when bitcoins are slowly and gradually introduced unlike paper currency introduced all at once, seemingly losing value over time with ever rising inflation. Hence, a total cap was placed at 21 million, with bitcoins being mined at an average of one block each 10 minutes. Henceforth, one can expect only a set number of bitcoins mined per year.
The bitcoins enter circulation every time a block is mined followed by adding the same on to the block chain. The mining algorithm difficulty is set in a manner so as to maintain the frequency of 1 block mined after 10 minutes. The difficulty level is made to set after about 2016 blocks are mined over two weeks duration.
When the activity of miners is going on a massive scale with loads of hashing power working on the mining hardware to compute mathematical equations, it means the difficulty level of mining goes up. Similarly, if less hashing power is working upon to solve math problems, it means the difficulty level of mining goes down. Henceforth, the balance of mining 1 block at a duration of 10 minutes is maintained.
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Bitcoin Halving – Understanding the process
Bitcoin has ever been introduced into circulation by means of an ongoing process known as bitcoin halving occurring every few years. With the help of this mechanism, the number of bitcoins to enter the circulating supply each time are reduced to half, and so are the mining rewards offered to users. So, it means the entire bitcoin circulation would be out by 2140 and possibly even earlier than that, say in 2078, as proposed by some Bitcoin experts.
Quite certainly, there is a lot of ambiguity on what can possibly be the exact date when all the bitcoins are mined and available in circulating supply. If you Google it out, 2140 is forecasted to be “the year.” However, considering how bitcoin halving is consistently going ahead, with no other external parameters coming to play, 2078 is the predicted year when ‘last’ bitcoin halving will take place.
Talking about the next bitcoin halving event, it is going to take place in either March or April of 2024. This is when not just the supply would go to half, but even the mining rewards from 6.25 bitcoins per block to 3.125 bitcoins per block. The last bitcoin halving event took place in May 2020 when COVID was on the peak after it hit globally in March 2020.
How Many Bitcoins Are There?
The existing supply of Bitcoins won’t correlate with the actual Bitcoins mined. The reason being Bitcoins are stored securely in wallets with passwords. If these passwords in the form of passphrases are lost, it means those bitcoins are lost forever as they can’t be retrieved back.
As per a study conducted by New York Times, almost 20% bitcoins are trapped in wallets that are inaccessible to no one. The average estimated value of these bitcoins is $140 billion. Since they can’t be retrieved back, it does pose an important point as to what is the exact total Bitcoin supply.
It’s pretty simple! As of today, there are 19 million bitcoins in circulation. So, if somebody asks, how much is the total supply of bitcoin, then you should minus inaccessible bitcoins from the 19 million supply.
Will it ever reach 21 million?
Even if all the bitcoins are available with not a single one being trapped in inaccessible wallets, still it won’t be possible to reach the exact mining supply of 21 million. In reality, the final figure would be close to 21 million. To calculate it better, Bitcoin is divided into 100 million Satoshis.
Is Bitcoin Mining more profitable with ASIC Miner?
ASIC Miners are specifically designed for profitable mining as it has many more advantages than GPU or CPU mining. For mining Bitcoins, ASIC is the favorable choice as it gives higher mining efficiency and consumes less power for mining the bitcoin. Bitcoins are the most mined coins, and ASIC miners are the best miners for mining the major coins because they are powerful and provide great output.
Is the Amount of Bitcoin Fixed?
Currently, the total supply of Bitcoin is capped at 21 million, with both mining supply and circulating supply preset in advance. The only impact a supply could have is when burns are initiated so that the depletion of supply starts taking place. Another scenario could be if Bitcoin block chain developers decide to change the code and program the Bitcoin limit to a different number.
So, as we just discussed, the total Bitcoin supply can surely be altered, afterall Bitcoin is merely a software program whose underlying code could be changed. It does require some work on the part of the network, consisting of community, stakeholders, and developers to arrive at a common consensus to approve the underlying code changes. Once the consensus is reached, developers undergo the changes within the Bitcoin Core program.
However, it isn’t a cakewalk for sure. For anything to be acted upon, all the Bitcoin nodes should accept and approve the modifications in the code. But, since Bitcoin was developed as a standalone program, with no scope for changes, the only way developers could deal with it is a hard fork, a change in the original algorithm is necessary for converting invalid behavior into a valid one, while all nodes upgrade to the new changes proposed for the new fork.
The Impact of the End of Bitcoin Mining for Stakeholders
No one can really predict when the bitcoin mining will finally come to an end. As per what has been proposed, the miners would still be rewarded even after all the bitcoins are mined, in the form of transaction fees that would supposedly replace mining rewards. Nevertheless, there are theories out there, but as of now let us speculate how the end of bitcoin mining would have an indefinite impact on the stakeholders.
- For Miners
Miners are responsible for keeping the Bitcoin block chain alive for which they are rewarded with a preset number of bitcoins per block mined. Even after all the bitcoins are mined, the miners would be awarded with the transaction fees as mining rewards. When using a regression model, a miner incurs an average mining cost of $19,300 and even if one uses the most efficient Ant Miners, one does incur an average cost of $7,700 and $10,560.
Old miners are no more efficient or usable enough to mine effectively. Hence, organizations need to set up mining farms or rigs, to leverage mining to the fullest potential. But, there is a catch here.
Bitcoin popularity is rising by leaps and bounds every year, keeping users constantly motivated to spend tons on setting up mining plants, as they know rewards would be unimaginably high when Bitcoin would rise to the fullest potential. But, what if, suddenly there is a drop in Bitcoin popularity due to losing interest or an altcoin like Ethereum taking over Bitcoin popularity? This could possibly result in a death spiral with too many miners leaving the Bitcoin ecosystem at the same time resulting in a sudden drop in the Bitcoin pricing.
Still there are loyal miners who would hold on to Bitcoin mining in spite of all these, resulting in their increased chances of mining blocks, due to decreased difficulty in mining. In any case, there are good enough rewards to expect. So, miners do have a lot to expect from mining down the lane.
- For Retail Investors
As bitcoins are moving towards the penultimate mining stage, bitcoins are gaining traction of retail investors, especially with an estimated rise in price when all the bitcoins are out in circulation. Today’s retail investors not just see Bitcoin as a store of value investment, but even a decentralized means to do ultra fast online payments, without any financial institution or Government intervening in between. As more and more HODLers hold on to their bitcoins, it is sure to raise the value of bitcoin as less bitcoins are made available for trading.
- For Institutional Investors
More and more large enterprises are wanting to test crypto investment waters with the likes of Morgan Stanley, Square, Tesla, and a lot many. As per Philip Gradwell, a Chief Economist at Chainalysis, bitcoin is considered as digital gold by big shot institutional investors. Due to the factors like bitcoin mining limit, future potential, and scarcity as more and more hold on to their bitcoin investments, institutional investors are treating the bitcoin as a hedge against inflation in the same manner as in case of precious metals investment.
- For Governments
Bitcoin acts as a double edged sword for Governments world wide. While most Governments are not in favor of crypto or bitcoin, the Government of El Salvador became the world’s first country to accept Bitcoin as a legal tender. With increasing popularity of Bitcoin ETFs, you are likely to see the Governments finally accepting cryptocurrencies backed by regulations, and possibly the launch of CBDCs in years to come.
Bottom Line
The popularity of Bitcoin is on the rise in spite of the markets declining for quite some time now. It won’t come as a surprise when more and more investors get on the bandwagon each passing day, waiting for that big day to arrive when all bitcoins would be available to trade. The biggest financial experts globally predict Bitcoin to be the most valuable investment of all the precious metals or financial instruments, and the doomsday scenario is least likely to occur as Bitcoin traction and demand is never ever anticipated to die down. Miners are investing a lot of time in the Bitcoin mining process. All they need to do is find the best Bitcoin mining hardware shop, buy the mining device and start with the mining process.
