As a digital currency, it seems like Bitcoin would never run out. However, it won’t last forever. In fact, 85 per cent has already been mined.
So, why is there a limited number of Bitcoin? When will they all be mined? And, what will happen then?
Bitcoin Can Run Out?
In order for a currency to have value, it needs to have scarcity. Commodities like precious metals have value because their availability is limited and mining them is difficult. Fiat currencies have scarcity because governments control interest rates and other factors.
Because Bitcoin is not a physical object and is not controlled by any single party, it’s scarcity needs to come from elsewhere.
Some of this scarcity exists because the blocks that miners confirm to access coins are only released every ten minutes.
Some of this scarcity exists because mining is difficult and requires capital such that not everyone can be a miner. This scarcity is increased by the “halving” that happens every four years. During each halving, mining becomes more difficult and less rewarding in terms of coins.
Finally, “mining” is called “mining” because, just like with any precious metal, there are only so many coins out there. From the beginning, there were 21 million coins. Once they’re mined, they’re mined.
85% of Bitcoin Supply
According to CoinMarketCap, 17.85 million of the total 21 million coins have already been mined. That means that 85% has been mined.
As news broke, the price jumped back to above US$10K for the first time in weeks.
The price change is likely due to more recent adopters and investors. People with a strong understanding of Bitcoin understand that mining will continue until the last coin is mined in 2140.
Scarcity and Value
Mining and value share a unique relationship.
As mentioned above, the regular halving continually makes mining more difficult and less rewarding in terms of coins. However, the halving also produces value, which makes those coins more valuable.
There are currently 12.5 coins introduced every ten minutes. However, those coins are worth more than the 50 coins mined per ten minutes when Bitcoin first launched. As a result, the miners are making fewer coins but more money.
Currently, mining produces scarcity but it also produces uncertainty. The end of mining – which won’t happen until after we’re gone – will only contribute to the stability of Bitcoin. At that time, the value will be determined entirely by demand.
What About the Miners?
Forecasting cryptocurrencies a year or two in advance is virtually impossible, never mind 120 years.
By then, there might not be any other currency worth talking about. If that’s the case, the miners might have to find a new line of work. Of course, that won’t be hard. Mining rigs are good for more than just mining, after all. Aside from that, block rewards are not the only source of income for miners, when the time comes, they could still rely on transaction fees.
On the other hand, the future crypto landscape may be much like today’s. There may be any number of altcoins floating around with new ones still being launched. In that case, miners could just turn their rigs to mine other coins.
Jon Jaehnig is an American freelance writer specializing in Technology and Health. Jon has degrees in Scientific and Technical Communication and Journalism from Michigan Technological University and lives in Michigan’s Upper Peninsula with his wife and cat. For more from Jon, you can follow him on LinkedIn and Twitter.