What Happens After All the Bitcoins Have Been Mined?

What Happens After All the Bitcoins Have Been Mined?

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In Bitcoin investing, we know that there are 21 million pieces of Bitcoin that can be mined. Estimates are that all Bitcoins will be mined by 2140 and no new Bitcoins will be in circulation after that.

In many ways, Bitcoin can be likened to digital gold. Like gold, Bitcoin investments cannot be made haphazardly. It takes effort to mine or extract (mining) to bring one Bitcoin chip. If gold is extracted from the physical Earth, then Bitcoin must be “mined” through computational methods.

Further conditions, Bitcoin must be present in a limited supply. Hence, there were only 21 million Bitcoins produced.

Bitcoin blockchain technology is designed on the principle of controlled supply. Bitcoin is earned on average in one block every ten minutes. In addition, the number of Bitcoins mined by each block will decrease by 50% every four years.

Once these 21 million pieces of Bitcoin are mined, most of the network will operate the same as it is today. However, there is one important difference: Bitcoin miner rewards will be expensive. Why is that?

Rewards for Miners Helping Smooth Bitcoin Investment
Currently, more than 18.5 million Bitcoin chips have been produced for the investment of the crypto asset, which is equivalent to scoring 88.3% of the maximum Bitcoin supply. With only 3 million coins left, it looks like Bitcoin is currently in the final stages of mining.

What Happens After All the Bitcoins Have Been Mined?However, it is estimated that it will take about another 120 years to print the last Bitcoin due to the halving process. What is the halving process?

During this time, miners will be rewarded in the form of Bitcoin chips after verifying a successful “mine” block. However, the rewards continue to fall throughout the year. Well, this decrease is called halving (divide by two).

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When Bitcoin was first launched, the reward set was 50 Bitcoins. But this number is reduced through a periodic halving system after 210,000 new blocks are discovered in Bitcoin mining activity. For example, a reward of 50 Bitcoin coins will gradually decrease to 25, 12.5, and 6.25 pieces, respectively.

So far, three times the reduction has occurred in Bitcoin investment mining. As of May 2020, the block reward has undergone a halving process from 12.5 pieces to 6.25 pieces of Bitcoin for miners. The next halving is predicted to occur in 2024.

Bitcoin miners will continue to be rewarded until a total of 21 million Bitcoin pieces have been minted. After that, no new Bitcoins will enter circulation.

What Will Miners Do When The Entire Bitcoin Investment Supply Has Been Mined?
After a total of 21 million Bitcoins have been minted, Bitcoin miners can still participate in the block discovery process. However, they will not be incentivized in the form of Bitcoin block rewards.

Bitcoin Investment SupplyIn addition to block rewards, Bitcoin miners also receive all fees incurred for transactions included in each newly discovered block.

Currently, transaction fees make up a small fraction of a miner’s income, as miners are currently printing around 900 Bitcoins (or the equivalent of US$39.8 million) per day. However, they only get a commission of about 60 to 100 pieces with a value of between US $ 2.6 million to US $ 4.4 million.

That means, transaction fees in Bitcoin investments of miners currently only reach 6.5% of miners’ income.

Changes to the Bitcoin ecosystem could drive significant shifts in miner adoption, even after block rewards stop,” said Simon Kim, CEO of VC fund #Hashed.

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According to him, the loss of future rewards will not disappoint the miners and stop them from mining Bitcoin.

Changes to the Bitcoin ecosystem and its position as a major currency in the virtual world could drive significant changes in miner adoption even after block rewards stop,” he said.

Block Reward Lost, Bitcoin Investment Mining Fee Increase
A halving system and a miner compensation structure based on transaction fees will almost certainly destroy the Bitcoin mining network. Because, there is a possibility that miners will increase the “transaction value” of their mining services, so that the cost of mining Bitcoin in the future will be more expensive.

Bybit CEO Ben Zhou said the conditions would be similar to what happened during the 2017 Bitcoin bull run.

As the reward for mining decreases with each halving, and long before the last Bitcoin is mined, transaction fees will play an increasingly prominent role,” Zhou said. “Transaction costs in Bitcoin investments are likely to grow in inverse correlation with diminishing mining yields.”

Crypto.com COO Eric Anziani also added that Bitcoin price growth, accompanied by savings in electricity costs in Bitcoin mining, will gradually make Bitcoin mining a profitable endeavor.

For example, when the price of Bitcoin soared in October 2020, transaction fees increased about nine times in two weeks. Today, transaction fees average around US$17 or a third of the cost during the peak of the bull run in 2017.