21 Million Bitcoin Limit: What Happens When All the Bitcoins Have Been Mined?

Bitcoin continues gaining traction and popularity for its decentralized nature and potential long-term value growth. More than 19 million bitcoins have been mined, and the next Bitcoin halving is taking place less than a year from now. This leads us to a most perplexing question: What happens when all the bitcoins have been mined?

Key Takeaways:

• An average of 900 bitcoins are being mined daily. About 92.358% of bitcoins are already mined.

• The upcoming Bitcoin halving will occur in 2024 when the current reward of 6.25 BTC will be halved to 3.125 BTC.

• Stakeholders such as Bitcoin miners, retail and institutional investors, and governments are most likely to be affected when all 21 million bitcoins have been mined. 

How Many Bitcoins Are Left to Mine?

As of Jun 2023, approximately 19.402 million bitcoins are already in circulation, which means only 1.59 million bitcoins are left for mining. An average of 37.5 bitcoins are being mined hourly, which makes 900 BTC mined each day. No bitcoins are truly lost. The assignment of the term “lost” to Bitcoin relates to owners who have misplaced their private keys, which results in their Bitcoin being locked away permanently.

Bitcoin Halving Events

The practice of halving is used to reduce the number of available bitcoins entering circulation by half every time 210,000 blocks have been mined (roughly every four years). This means the last Bitcoin will be mined by the end of 2078. In other words, no more bitcoins will be left to mine.

There is some confusion surrounding the exact date when the total Bitcoin supply will have been mined. If you search Google for the answer, chances are that the date of this event is listed as 2040 instead of 2078. 

The reward for mining started out at 50 BTC per block when Bitcoin was released in 2009. When the first Bitcoin halving took place in Nov 2012, the reward was halved to 25 BTC per block, followed by block rewards of 12.5 BTC in Jul 2016 and the most recent halving (May 2020), lowering the block reward to 6.25 BTC. It’s estimated that the next Bitcoin halving will occur on June 5, 2024, reducing the Bitcoin block reward to 3.125 BTC. As of Jun 15, 2023, the current block count is 794,416, with 45,584 left to be mined until the next halving at 840,000 blocks.

Why Is There a Supply Limit for Bitcoin?

Bitcoin’s pseudonymous founder, Satoshi Nakamoto, determined in 2008 that the total Bitcoin supply cap would always be pegged at 21 million, ensuring a virtual currency without inflation. However, since Bitcoin is intended for transactional use, just like paper currency, too many bitcoins in the market could generate wild BTC price swings.

With that in mind, the inventor stipulated a 21 million Bitcoin limit to control the supply and, thus, future Bitcoin prices and fluctuations.

One way to control the mechanism was to gradually release bitcoins, without overwhelming the market by releasing all 21 million bitcoins. For this reason, Bitcoin’s code was designed to allow only a fixed number of bitcoins to be mined every year until the 21 million limit is reached.

New bitcoins enter circulation whenever a new block is mined and added onto the Bitcoin blockchain. Bitcoin mining is programmed with a difficult mathematical algorithm that helps keep the entire system stable by maintaining a 10-minute duration for finding new blocks. This difficulty is updated every 2,016 blocks, or roughly every two weeks, as the network itself determines if the activities of miners have increased or decreased. The network then adjusts the Bitcoin mining difficulty to keep each block time to roughly 10 minutes.

How Many Bitcoins Are There?

Every day, fewer Bitcoin blocks are available to mine as the Bitcoin mining end date gradually approaches. However, it’s essential to understand that not every Bitcoin mined to date is in circulation — which further reduces the total supply of bitcoins in circulation at any given moment. There are many reasons why the existing supply of bitcoins doesn’t correlate to the total number of bitcoins already mined.

One of the main reasons is the method of storing Bitcoin. Since the owner needs to protect their Bitcoin using wallets and passwords, there’s no way to access the stored bitcoins if the owner passes away without giving someone else access to the password. Bitcoin can also be rendered permanently inaccessible due to other errors on the part of its owners. This innovative digital currency is unlike any other assets in that it’s almost impossible to retrieve without the consent of the owner.

According to a recent study by the New York Times, almost 20% of bitcoins are trapped in inaccessible wallets, with a total value estimated to be around $140 billion. These bitcoins will likely stay trapped indefinitely, which affects the total supply of bitcoins in circulation.

The next time someone asks you how many bitcoins are in circulation, simply look at the circulating supply. As of this writing, that number is around 19.4 million, minus any bitcoins trapped in inaccessible wallets.

The Final Figure

Even if there were no trapped bitcoins, it’s theoretically impossible to reach the supply limit of 21 million once all the bitcoins have been mined. In reality, the final figure will be very close to Bitcoin’s supply cap because Bitcoin’s supply is never expressed in exact terms. Instead, the code Bitcoin uses rounds off decimal points to the closest integer. As a result, a supply of 6.2589 bitcoins is represented as 6 bitcoins.

Bitcoins are split into smaller units, known as satoshis. One satoshi constitutes one 1/100 millionth of a Bitcoin. Due to these smaller units — and the rounding off of figures — experts suggest the Bitcoin supply cap will be limited to 20,999,999 instead of 21 million.

Incentive to Increase Bitcoin’s Total Supply

Bitcoin mining is popular because there’s a tremendous incentive for miners who can successfully mine the maximum amount of Bitcoin for their gain. Although the incentive is paid in block rewards, besides receiving Bitcoin miners also receive a part of the transaction fees associated with the completion of a block.

After the three previous halvings, miners currently receive 6.25 BTC for confirming a block. Despite the reduction in the mining reward amount, the higher value of each Bitcoin makes up for the halving effect. Transaction fees have also increased as a result of Bitcoin going mainstream. While Bitcoin transaction fees are expected to rise, not all BTC transactions need to be settled on the blockchain. Additional layers, such as Lightning Network, provide cheaper, faster ways to transfer Bitcoin, and will likely help with mass adoption as well.

Some experts believe that incentive isn’t an issue — because the transaction fees, which make up only 6% of the existing revenue for miners, will increase substantially, making up for the loss of Bitcoin block rewards. Still, this isn’t a satisfying answer for many stakeholders who are actively engaged in the Bitcoin industry. They still want to know what will happen when all 21 million bitcoins have been mined, and if there’s something they can do about how many bitcoins there will be in the future.

Is It Possible to Change the Bitcoin Supply Cap?

It’s theoretically possible to change the total Bitcoin supply by altering the underlying code. Since Bitcoin itself is software, experts agree that it can be changed. To do so will require developers, stakeholders and the community at large to agree to alter the code. If an agreement were to be reached, the developers would write a code to integrate those changes into the Bitcoin Core.

In order for everything to work properly, the next step would be to ensure that all nodes on the Bitcoin network either accept the changes — or are forced off of it. However, getting every node to accept the changes is no trivial task, since the Bitcoin platform was primarily designed as a standalone system that requires no changes. At that point, the developers would need to deal with a hard fork, which is a consensus change that makes a previously invalid behavior valid. In the perfect scenario, all the nodes would be upgraded to accept the proposed changes.

Another scenario would have only some Bitcoin users favoring the existing 21 million BTC limit. In this situation, miners and nodes who didn’t accept the change would continue to operate on the existing Bitcoin platform. These dissidents would likely compete with the new Bitcoin platform to capture market share. This is known as a contentious hard fork, as it would create another chain that splits the miner base. One such example is Bitcoin Cash.

Impact on Stakeholders: What Happens When All 21 Million Bitcoins Have Been Mined? 

At this time, no one can accurately predict what will happen when all the available bitcoins have been mined.

Several analysts favor using higher transaction fees to compensate for the absence of block rewards. New technologies will likely help to cut the mining cost, eventually resulting in more profit for miners. Another theory suggests that Bitcoin platforms will only be used for large transactions of very high value, offering sufficient revenue to satisfy stakeholders. Still other theories speculate about proof of stake (PoS) and mining cartels.

From a stakeholder’s perspective, the following is a brief overview of what will happen when all of the bitcoins are mined.

How Does This Affect Bitcoin Miners?

Miners are responsible for verifying transactions and adding new blocks to the Bitcoin network. They must solve complex mathematical puzzles, which nowadays require costly ASIC computers with substantial computational power that use a lot of electricity.

To compensate for their effort and cost to secure the network, miners are awarded block rewards and transaction fees.

Currently, most miners and mining firms use the Bitcoin block reward system to offset the cost of mining and still make a profit. But as mining rewards are halved, it’s expected that Bitcoin mining costs will eventually exceed the BTC rewards that miners make, well before the fixed supply is reached.

However, if the price of Bitcoin increases over time, it can sometimes offset a decrease in Bitcoin block rewards. Currently, using a regression model, the average cost of mining a Bitcoin is roughly $17,600, and the most efficient miners using Antminer S19 XP can still mine at breakeven between $7,700 and $10,560, depending on the network difficulty and cost of electricity. All miners from the previous generation of 2016 to 2018 are no longer profitable, and many of the mining rigs between 2019 and 2020 are also no longer profitable.

What the Future Holds

In the next Bitcoin halving in 2024, these breakeven prices will double if more efficient mining rigs aren’t created or cheaper sources of electricity aren’t found. This could spell trouble for miners if Bitcoin’s price doesn’t increase enough to reach those levels, creating a potential death spiral in which too many miners stop mining as it becomes unprofitable. There just won’t be enough hash power to mine sufficient blocks for the mining difficulty to readjust within two weeks.

The only question is: What happens to transaction processing fees when all the coins are mined? Theoretically, if a miner validates enough transactions, the fees earned can help compensate for missing block rewards. But the transaction fee amount will depend on the state of the network in the future.

If the current limit of 21 million isn’t breached, one of the existing scenarios will need to occur: Higher transaction fees and reduced operational costs should be enough to keep things rolling; or, at the opposite end of the spectrum, miners may form cartels to control the supply and demand of bitcoins, as practiced in oil production and in diamond mining industries.

Retail Investors and HODLers

As Bitcoin mining nears its limit, the value of Bitcoin is expected to rise. Assuming that Bitcoin remains popular, the limited supply and investment value will tempt people to use Bitcoin as an investment commodity that acts as a store of value rather than for transactional use.

The price graph of Bitcoin favors this extrapolation because its value has consistently risen, despite the decrease in reward per block. HODLers and retail investors will hoard bitcoins in their wallets instead of releasing them. These actions will further decrease the supply, and keep Bitcoin’s value high.

In the future, whenever a new crisis emerges, central banks around the world are likely to print more money to combat it, causing a devaluation of the currency. Citizens of that country may choose to use their highly inflationary local currency to buy Bitcoin, a disinflationary digital currency that cannot be controlled, as a store of value, regardless of the supply of Bitcoin, as long as its supply is limited.

Institutional Investors

A growing number of companies are eager to test the crypto waters. Tesla, Block, Morgan Stanley and many other brands already have long-term plans to adopt crypto. Even Goldman Sachs is looking to buy crypto. If the popularity of cryptocurrencies continues unabated, it’s likely to attract more institutional investors who will be ready to take first-mover advantage.

According to Philip Gradwell, Chief Economist at Chainalysis, institutional investors are treating Bitcoin as digital gold. Due to Bitcoin’s mining limit, scarcity and potential price increase, institutional investors will use virtual currency as a hedge against inflation, just as they’ve used precious metals in the past.

Governments

Bitcoin and other cryptocurrencies have proven to be a double-edged sword for governments worldwide. While many countries don’t accept Bitcoin as legal tender, they’re keenly watching its impact on the world’s economy. As of now, El Salvador is the first country to adopt Bitcoin legally, but more countries are likely to become friendlier with Bitcoin or outright follow suit and legally adopt it.

Instead of the take-it-or-leave-it approach, policymakers will probably favor a middle ground, such as approving a Bitcoin ETF. Governments will adopt Bitcoin — but they’ll try to regulate every aspect of its operations. Rather than waiting to find an answer to what happens when all the bitcoins have been mined, there’s a strong possibility that individual governments, including that of the U.S., will create their own versions of digital currencies to compete with Bitcoin, known as CBDCs.

The Bottom Line

Given the enduring popularity of Bitcoin, we can safely assume that, in the future, it will continue to attract stakeholders even when the total Bitcoin supply has been mined. Reaching the maximum number of bitcoins won’t create a doomsday scenario unless Bitcoin loses its demand and traction. More likely, the Bitcoin ecosystem will continue to adapt to changing patterns in the global economy, giving it a stable outlook for the foreseeable future.

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