One of the most distinguishing features of Bitcoin (BTCUSD) is its restricted currency supply. Bitcoin developer Satoshi Nakamoto, who goes by the pseudonym Satoshi Nakamoto, conceived the cryptocurrency basically as digital gold and limited the Bitcoin maximum supply to match the finite amount of actual gold.
The quantity of bitcoins that may be issued (mined) is limited to 21 million. Every 10 minutes, new bitcoins are added to the Bitcoin supply, which is the average length of time it takes to produce a new block of Bitcoin. 1 After every 210,000 blocks, or about every four years, the quantity of bitcoins produced every block is cut by 50% by design.
Will there ever be a total of 21 million Bitcoins?
It seems unlikely that the total number of bitcoins issued will surpass 21 million. This is because the Bitcoin network employs bit-shift operators, which are arithmetic operators that reduce decimal points to the lowest integer possible.
When the block reward for creating a new Bitcoin block is split in half and the amount of the new reward is determined, this rounding down may occur. One satoshi equals 0.00000001 bitcoins, hence the award is stated in satoshis. 1 A satoshi cannot be divided in half since it is the lowest unit of measurement in the Bitcoin network. When dividing a satoshi in half to determine a new reward amount, the Bitcoin blockchain is built to round down to the next whole integer using bit-shift operators. 2 The overall number of bitcoins released is expected to fall slightly short of 21 million due to the regular rounding down of Bitcoin block rewards in fractions of satoshis.
The last bitcoin is not predicted to be created until the year 2140, given the quantity of new bitcoins released every block decreases by half every four years. When Bitcoin was initially created, the amount of new bitcoins issued every block was 50, however that number has now dropped to 6.25 as of May 2020.
Although there is a limit of 21 million bitcoins that may be created, the number of bitcoins in circulation is likely to be far lower. Bitcoin holders might lose access to their funds if they lose their private keys to their wallets or if they die away without sharing their wallet information. According to a research released in June 2020 by the crypto forensics company Chainalysis, up to 20% of all Bitcoins produced might be permanently destroyed.
What Happens When 21 Million Bitcoins Have Been Mined?
No additional bitcoins will be produced when the maximum number of bitcoins has been achieved, even if that amount is slightly less than 21 million. Bitcoin transactions will continue to be pooled and processed into blocks, and Bitcoin miners will be compensated, although most likely simply with transaction processing fees.
Bitcoin miners are expected to be impacted by Bitcoin hitting its upper supply limit, but how they are affected relies in part on how Bitcoin matures as a cryptocurrency. If the Bitcoin blockchain processes a large number of transactions in 2140, Bitcoin miners may still be able to earn solely on transaction processing fees.
Even with low transaction volumes and the removal of block rewards, miners may still earn in 2140 if Bitcoin is primarily used as a store of wealth rather than for everyday transactions. Miners may charge hefty transaction fees to execute big-value transactions or huge batches of transactions, with more efficient “layer 2” blockchains like the Lightning Network assisting everyday bitcoin spending.
However, if Bitcoin mining becomes unprofitable in the absence of block rewards, the following undesirable consequences may occur:
- Miners may create cartels in an effort to gain control of mining resources and charge greater transaction fees.
- Selfish mining happens when miners conspire together to keep fresh legitimate blocks hidden and then release them as orphan blocks that have not been verified by the Bitcoin network. This method may lengthen block processing periods and guarantee that when new blocks are ultimately issued to the blockchain, they are accompanied by large fees.
The Bottom Line
In the year 2140, would Bitcoin work similarly to cash or gold bars? Bitcoin’s environment is still evolving, so it’s feasible, if not probable, that it will continue to change over the next several decades. However, no additional bitcoins will be issued when the 21-million coin cap is met, regardless of how Bitcoin progresses. The effect of reaching this supply limit is most likely to be felt by Bitcoin miners, but it’s conceivable that Bitcoin investors could suffer as well.
What is the Total Number of Bitcoins that Have Been Mined?
18.9 million bitcoins have been mined as of January 2022, with roughly 2.1 million bitcoins still to be distributed. The total number of Bitcoins available is limited to 21 million.
How Long Does One Bitcoin Take to Mine?
The size of the block reward, or how many new Bitcoins are awarded to crypto miners for creating a new Bitcoin block, determines how long it takes to mine one Bitcoin. A new block is generated every 10 minutes, and the current block reward is 6.25 Bitcoins. A new bitcoin is mined every 1.6 minutes on average.
When Bitcoin’s Supply Limit is Reached, What Happens to Mining Fees?
When the Bitcoin supply hits 21 million, mining fees will be abolished. Instead of a mix of block rewards and transaction fees, miners are more likely to receive money solely from transaction processing fees.