The primary reason bitcoin has a gigantic market valuation compared to other digital currencies is that bitcoin has a finite supply. A finite supply of bitcoin is also why its increasing scarcity, further increasing the demand for bitcoin. Unlike bitcoin, land-based actual currencies like Dollars have an infinite supply, and the central bank of a region authorizes these.
The originator of bitcoin, Satoshi Nakamoto, capped the entire supply of bitcoin to 21 million BTCs. To know about cryptocurrency trading, try now. Undeniably, we can expand the supply of BTC if the majority of the stakeholders vote to do so. However, no savvy investor will agree to increase the supply of BTCs as it will lead to a plunge in bitcoin’s value.
Every 10 minutes, a miner or validator generates bitcoins by adding new blocks to the blockchain. As per reports, around 18.8 million bitcoins are floating in the market. So, only 20% of bitcoins are left to be mined in a nutshell. Bitcoins are the incentive or rewards that a miner gets after verifying the transaction. So you might think about what will happen to bitcoin once miners have mined 21 million units.
Will bitcoin miners ever be able to mine 21 million BTCs?
Before discussing the future of bitcoin after mining 21 million BTCs, we should understand whether miners will ever be able to reach that milestone or not. As per a few reports and cryptocurrency experts, bitcoin might not reach the 21 million figure.
To outline, bitcoin is not issued by any government or bank. The action of creating a new bitcoin unit is known as bitcoin mining. Bitcoin miners get bitcoin as a reward for decoding or finding a cryptographic math puzzle solution.
The reward in the form of bitcoin keeps varying. If a miner solves the math puzzle 10 minutes earlier than other miners, he will avail himself of a block reward of 6.25 bitcoin units. The final estimate is that bitcoin miners will mine the last bitcoin in 2140. However, bitcoin miners will not mine all 21 million BTC. We all know that the minor component of a bitcoin unit is Satoshi, and 100 million Satoshi forms a single bitcoin mining.
What happens when miners will mine 21 million BTCs?
The result of bitcoin miners not being able to mine the entire 21 million BTCs opens a probability that this network will be efficient even subsequent 2140. Besides earning BTCs as the block reward, miners also earn transaction fees as the reward. After the capped supply, the bitcoin network will focus on transaction fees as a reward or incentive. Since rewards will be the primary source of income for bitcoin miners, they will increase just like taxes.
Effect on the bitcoin miners!
Both block rewards and fees for processing transactions act as an income source. Since bitcoin’s market value is skyrocketing, bitcoin miners can cover the mining expenses and profit from the block reward and transaction cost.
Bitcoin mining cost depends upon a few factors: the value of bitcoin, cost of energy, and difficulty of bitcoin mining. When miners are close to mining the entire 21 million BTC, the reward of bitcoin mining will dramatically decline and might not cover the expenses of mining operations.
But as per reports, bitcoin halving and its finite supply are making bitcoin scarcer. The scarcity of bitcoin has been the primary reason for this price bump over the past few years. Even after halving the bitcoin mining reward every four years, it did not affect mining profitability. It is because bitcoin halving always skyrockets the market value of bitcoin.
The future of bitcoin mining is very uncertain as we don’t know the demand for bitcoin in the future. Per inflation, every bitcoin transaction’s transaction fees will increase and be massive by the end of 2140. Most of us will not be alive to witness the wild growth of bitcoin after mining 21 million BTCs. The finite supply is also responsible for the much lower inflation rate of the bitcoin network.
You should know some facts about bitcoin mining and its future after mining 21 million BTC.