Bitcoin miners once celebrated making over $4 million in bitcoin mining rewards in a single hour, a new all-time rewards record. It is not surprising as bitcoin saw a new all-time high the same week at over $47,000 per token. Large firms like PayPal and CashApp are buying more and more bitcoin and the demand for the token is higher than ever before.
With all this influx of new miners and participants in the market, it is worth noting that the supply of bitcoin is not infinite. In reality, there are only 21 million bitcoins that will ever exist and of that number more than 18.5 million have already been mined. This means that less than 3 million are left to be mined and with the current market trends, that number will be exhausted eventually.
This leaves the question of what will become of the bitcoin and larger crypto market when all the bitcoin has been mined?
The State of Bitcoin
Bitcoin as a concept refers not only to the token that can be spent but the Bitcoin network through which transactions take place, such as sending and receiving. When a transaction takes place across a blockchain, it has to be validated by a network of computers. When this is done, the transaction is added to a block (a collection of transactions) and once a block is completed, the miners involved receive a set amount of tokens, in this case, bitcoin.
The amount of tokens per block is ever-changing. The way the bitcoin protocol is set up, the number of tokens given per block is reduced by half every four years ( a halving). Currently, this reward is 6.25 BTC per block and it will be cut in half by 2024. This mechanism in the Bitcoin protocol is designed to manage the token supply to prevent bitcoins from being mined too quickly. In fact, it is predicted that the last Bitcoin block will not be mined until around 2140.
But whether in 2140 or 2041, the last bitcoin block will be mined in the end, and what happens then?
What Happens Post-Mining?
When the last bitcoin has been mined, it means that miners will not receive the usual bulk of bitcoin for validating transactions and that all the bitcoin that could be in circulation will already be acquired. This, however, does not mean that everyone would simply abandon the Bitcoin blockchain as a result.
Transactions still need to be validated and while validating transactions will not be rewarded with bitcoin in the previous sense, validators will still be rewarded with bitcoin thanks to transaction fees paid by network users. In fact, transaction fees will likely be higher at that point as some incentive is needed to keep validators active within the Bitcoin community.
What about the price of bitcoin? Will it soar sky-high thanks to the new permanent scarcity and a lack of injection of new tokens into the market? The truth is that no one can predict what the bitcoin market will be like in 100 years. If such a scarcity happened today, the price would likely spike exponentially with market competition for the few bitcoins in the market.
There is no guarantee, however, that anyone will even use bitcoin in 100 years. If bitcoin attains adoption as an everyday means of payment by that time, the price will likely be stable enough that the last block being mined will not affect it too much. This is in addition to the fact that bitcoin supply will reduce gradually over decades as opposed to grinding to a sudden halt.
Overall, when the last bitcoin block is mined, it will either be in a mature market that will not be overly affected by it, a still volatile one that will see a price spike in response, or an already obsolete market.