There will be only 21 million bitcoins. As soon as the extraction of all of them is completed, no new bitcoins will be added to the network, which should happen around 2140. The Bitcoin blockchain is designed based on control and supply constraints, meaning that only certain numbers of newly extracted bitcoins can be mined and entered into the bitcoin network over a period of time until that number reaches 21 million units. Once 21 million bitcoins have been mined, the network will largely follow the same function as before, but miners will only benefit from commissions by confirming transactions.
In fact, after extracting all the bitcoins, if this digital currency adheres to its current consensus algorithm, the only incentive for miners will be the transaction fee, which is not a reasonable amount today, but in the future with the acceptance of bitcoins and the increase in the price of this digital currency. It can be different. Read more, using an article Published on the Decript website, we are examining the future possibilities of Bitcoin after extracting the last coin unit of this network.
When is the last bitcoin mined?
About every 10 minutes, bitcoin miners “create” a new block containing transactions by solving an encrypted equation, and the miner who succeeds in doing so adds a new block to the Blockchain. This block contains transactions that have already been awaited in the Bitcoin Mem Pool and are usually selected based on the amount of transaction fees they offer to miners.
For each block discovered, the miner receives a specific block reward. When Bitcoin was first launched, the reward per block was 50 bitcoins. However, this amount is halved periodically after the extraction of 210,000 new blocks during a special event.
This event, which halves the block reward, and is therefore called the hawing, occurs almost every four years, rewarding the block with 25 bitcoins, 12.5 bitcoins, 6.25 bitcoins, and so on. Reduces to the end. So far, three Hawing events have ended, the last of which occurred in May 2020 (May 99) and reduced the block reward to 6.25 bitcoins. The next hawing will take place in 2024.
Bitcoin miners can receive block rewards until a total of 21 million bitcoins are mined, after which no new bitcoins will enter the network. Slightly more than 18.5 million bitcoins are currently generated, which is equivalent to 88.3% of the maximum bitcoin supply over the past decade, but due to the gradual decline that occurs every four years as a result of the hawing process. It will take another 120 years to extract the last bitcoin.
What will the miners do when all the bitcoins have been mined?
After mining 21 million bitcoins, bitcoin miners can still participate in the block discovery process, but will not receive a block reward, although not in the sense that they will not be rewarded.
Bitcoin miners now receive, in addition to block rewards, all fees paid for transactions in each new block. Currently, transaction fees make up a small portion of a miner’s revenue, as miners mine about 900 bitcoins ($ 39.8 million) a day, but between 60 and 100 bitcoins a day (equivalent to $ 2.6 to $ 4.4 million) will receive transaction fees. In other words, the transaction fee currently accounts for only 6.5 percent of a miner’s income, but by 2140, that amount will reach 100 percent.
According to Simon Kim, CEO of Hashed Investment Fund, the blockchain bonus will not diminish the miners’ motivation. Kim explained:
Changes in the Bitcoin ecosystem and its position as the main currency in the virtual world, even after the end of the block reward, can make a significant difference in the way miners welcome the mining process.
Increase the value of bitcoin; Economical extraction
As the value of bitcoins increases over time, miners gain enough incentive to operate without block rewards and only for a fee.
It is true that currently changing the terms of the bonus payment to be based solely on the transaction fee can discourage much of the mining network; Because very few bitcoin miners can still make money from bitcoin mining if they only get 6.5 percent of their usual reward.
However, if the use of the bitcoin network becomes too high and the price of this digital currency increases, the competition for placing transactions in the empty space of the block will increase significantly. According to Ben Zhou, CEO of the ByBit trading platform, this is likely to lead to an increase in transaction fees for miners, similar to what happened during the 2017 bitcoin uptrend. Zhou explained:
As the mining reward decreases at each hawing, long before the last bitcoin is mined, the role of the transaction fee in profitability for miners will gradually become more prominent. The transaction fee is likely to increase in reverse to compensate for the reduced block reward.
In addition, according to Eric Anziani, chief executive of Crypto.com, the rise in bitcoin prices and the gradual reduction in energy costs could mean continued mining profitability. Anziani stated:
In our opinion, the more bitcoins and digital currencies grow, the higher their price should be. This price increase can also offset the reduction in block rewards. In addition, as the extraction process becomes more efficient and the use of renewable energy sources becomes more widespread, the power consumption of miners is reduced, allowing them to remain in the industry and keep the grid safe.
The total transaction fee paid per day, at its peak in December 2017, increased to 1,495 bitcoins; At the time, Bitcoin was priced at $ 14,000 and the transaction fee was around $ 60. As a result, at the time, the fee was a $ 21 million profit for miners, which is now equivalent to about half of their blockchain earnings today. This can be repeated in the future.
With the rise in the price of Bitcoin in October 2020 (October 99), the transaction fee also increased about 9 times in two weeks and reached about $ 14. Currently (March 12, 1999), the average transaction fee is about $ 17 or one third of its peak in December 2017.
Unlikely to change the protocol
Another possibility, which is very weak, is that the Bitcoin reward mechanism could change some time before the final block is extracted.
Luka Boškin, chief marketing officer at NewsCrypto, argued that by reducing the number of bitcoins generated through mining, bitcoins would see “significant changes” in their protocol. He said in an interview:
This could ultimately change the consensus mechanism to a more environmentally friendly model, such as stock proofs or another work-proof substitute.
Niklas Nikolajsen, the founder of Swiss digital currency startup Bitcoin Suisse, has a similar view. “In an interview with the German television program Galileo, he said:
I’m sure when using technology [اثبات سهام] If ubiquitous, bitcoin will be compatible with it.
So far, however, no specific action has been taken to introduce stock proof to the Bitcoin network, and there is no Bitcoin Improvement (BIP) proposal to help with this change. For changes to Bitcoin rules, the majority of the Bitcoin community must agree that this has not yet happened.
On the other hand, Jordan Stoev, director of digital currencies at Skrill Payment Company, believes that bitcoins are likely to be stored for a significant amount of value transfer, and for the majority of transactions, through second-tier or blockchain solutions. Alternatives will be used. He stated in an interview:
Only transactions of very significant value will be done in-chain, and these transactions also pay very high fees, which can be sufficient as miners’ income.