The Last Bitcoin: What Will Happen Once All BTC Are Mined?

Satoshi Nakamoto mined the genesis block on January 3, 2009, mining the first 50 bitcoins (BTC) in history and starting a billion-dollar industry focused on mining crypto. However, with limits on the bitcoin supply, the fate of miners after the final coins are issued is unclear.

Bitcoin is created through mining, a process involving computer hardware to solve complex mathematical problems and verify transactions on a blockchain network. For their efforts, miners are rewarded with a predetermined amount of BTC for each block of transactions.

According According to the Blockchain Council, more than 19 million BTC have been awarded to miners in block rewards, and according to Nakamoto’s white paper, only 21 million are available. Once this limit is reached, miners will no longer be rewarded for verifying transactions.

Speaking to Cointelegraph, Nick Hansen, founder and CEO of bitcoin mining firm Luxor Mining, says that despite the loss of block rewards, miners will continue to play an essential role in verifying and recording transactions on the blockchain, but how they are compensated remains unclear. goes, it will grow.

Currently, successfully validating a new block on the blockchain rewards miners with 6.25 BTC, which is worth around $188,381 at the time of writing. According To CoinGecko. Miners also get transaction fees.

According Since 2010, fees and block rewards have earned miners more than $50 billion, according to calculations shared in a May 1 tweet by on-chain analytics firm Glassnode.

since #bitcoinAt its inception, miners have generated a total revenue of $50.2B from block subsidies and fees, for an all-time estimated input cost of $36.6B.

This brings the all-time gross profit margin for miners to $13.6B (+37%). pic.twitter.com/TYvBSZbsRo

— Glassnode (@glassnode) 2 May 2023

Hansen believes that transaction fees will eventually become the primary incentive for miners to continue mining long after the last BTC is mined.

“This is why transaction fees have become such an important part of bitcoin mining economics, it has become even more important to understand the dynamics of transaction fees and how to forecast them in the future,” he said:

“As such, it is important to see fees increase over time, as the recent bitcoin ordeal, for example, has helped with this.”

However, that change is still years away, given that no one currently mining will be alive when the final BTC block reward is received.

gonna wait a long time to find out

According to Hansen, based on the block discovery rate and the halving process, which occurs roughly every four years — or every 210,000 blocks of transactions — the last BTC will likely be mined around 2140.

The bitcoin halving is a planned reduction in rewards to miners, with the next one currently estimated to be around April 2024. This will reduce the reward for each block to 3.125 BTC or approximately $94,190 at the time of writing.

In theory, by limiting the supply of BTC, the value of each coin should increase when demand increases and supply remains constant.

Hansen says that the price of BTC in 2140 will depend on unpredictable factors such as market demand, the regulatory environment, technological progress, and macroeconomic factors.

“The fact that there are all bitcoins in circulation can create a scarcity, but whether that scarcity translates into price growth is dependent on market dynamics,” he added.

“As we look to a future where all bitcoin has been mined, it is important to remember that bitcoin was designed with this endgame in mind.

“The reduction of block rewards and the shift towards transaction fees is an intrinsic part of the protocol, and represents a simple solution to ensure the ongoing security and viability of the network,” Hansen said.

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Jaren Mellerud, a research analyst at Hashrate Index, told Cointelegraph that as bitcoin adoption and usage increases, transaction fees will increase substantially and become the primary source of revenue for mining companies.

Melerud said that, by the time the last BTC is released, the block subsidy will have already been reduced enough that it won’t have a significant impact on the coin supply.

“Due to the huge block space demand relative to the scarce block space supply, transaction fees will skyrocket in a future scenario of hyperbitcoinization,” he added.

“If you don’t believe there will be transaction fees high enough to justify the existence of mining in the future, then you really don’t believe in bitcoin.”

What about Fiat?

Until the last bitcoin is mined, Melerud believes that its value will not be measured in US dollars or other fiat currencies.

He estimates that by then, the fiat money system will have long since collapsed, and bitcoin could be the successor, becoming the standard unit of account globally.

“Under such circumstances, the only valid way to measure bitcoin’s purchasing power is to see how much energy a bitcoin or a Satoshi can buy,” Melrud said.

“Just like we currently measure the purchasing power of the US dollar in terms of energy, in terms of barrels of oil,” he said.

The collapse of the fiat money system has long been predicted due to the many problems facing the traditional financial system. Most recently in March 2023, Silicon Valley Bank collapsed due to a liquidity crisis, followed by Signature Bank and Silvergate Bank.

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Ahead of the March 2023 banking crisis, a survey in February was conducted by business intelligence firm Morning Consult and commissioned by crypto exchange coinbase It was found that most of the respondents were already disillusioned with the global financial system.

Bitcoin may not be the same in 120 years

Speaking to Cointelegraph, Pat White, co-founder and CEO of digital asset platform Bitwave, believes that miners will remain an important part of the ecosystem, but not all will survive, with some shutting down due to rising costs.

According According to a March 24 report from Glassnode, miners are already experiencing long periods of unprofitability, with only 47% of trading days being profitable since 2010.

“I think it is possible that we will see some miners shut down or use other manipulative techniques in an attempt to increase fees,” White said.

“But I also think this will happen long before the last bitcoin is mined as the last few halvings will bring block rewards down to the Satoshi level.”

However, White also says that “a lot can happen in 120 years,” and that BTC could change radically over the next century.

White believes that by 2140, quantum computers will likely break the core encryption underlying bitcoin, although he says the engineers working on it have long known it is not quantum-secure.

“People should not necessarily be scared because of this quantum security issue. Between now and 2140, bitcoin will have to undergo a major rebuild from the encryption layer upwards,” he said.

“At that point, the bitcoin developer community will be able to assess whether we are truly on the way to a functioning transaction fee-based network, or whether additional bitcoin mining is necessary to ensure the security of the network,” White said. ” ,

White further speculates that while Satoshi Nakamoto’s white paper states that 21 million BTC is the supply limit and the most solid rule, none of us will live until 2140 to enforce that rule.

He believes that crypto relies on coding and consensus; Future miners could theoretically increase the BTC hard cap to more than 21 million if the community finds that the transaction fee incentive is insufficient to keep the network secure.

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What effect this might have on price is unclear, but either way, White thinks the price of bitcoin will stabilize at some global inflation-reflecting price point, and that major price movements will occur sometime in the next 120 years. If one or more nations seriously choose it as their reserve currency.

In that instance, he says it would “probably be independent of the bitcoin mining program” and that it would be the most concrete moment to propel the price of BTC.

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“There are things we can’t even imagine that could affect bitcoin – war and energy crises obviously – but what if we’re a true multiplanetary species by then and we’ve got support for solar system-level communication speeds. To do this would have to extend the block production time,” White said.

“What I’ve always found important is to focus on the most difficult problems we face today and do what we can to solve them. This could mean solving payments or digital ownership, or banking the unbanked – these are the problems to focus on now,” he said.