Satoshi Nakamoto mined the genesis block on January 3, 2009, minting the first 50 Bitcoin (BTC) in history and kicking off what would become a multi-billion dollar industry centered on cryptocurrency mining. However, with a cap on the Bitcoin supply, the fate of the miners after the last coins are issued is unclear.
Bitcoin is created through mining, a process that involves computer hardware to solve complex mathematical problems and verify transactions on the blockchain network. For their efforts, miners are rewarded with a predetermined amount of BTC for each block of transactions.
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 receive rewards for verifying transactions.
Speaking to Cointelegraph, Nick Hansen, founder and CEO of Bitcoin mining company 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 will evolve.
Currently, successful validation of a new block on the blockchain rewards miners with 6.25 BTC, worth approximately $188,381 as of this writing, according to CoinGecko. Miners also receive transaction fees.
According According to calculations shared in a May 1 tweet from on-chain analytics firm Glassnode, since 2010, fees and block rewards have netted miners more than $50 billion.
From #BitcoinSince Miners’ inception, the miners have earned a total revenue of $50.2 billion from the subsidy and block fees, for an all-time estimated cost of entry of $36.6 billion.
This puts the all-time aggregate profit margin for Miners at $13.6B (+37%). pic.twitter.com/TYvBSZbsRo
– glass node (@glassnode) May 2, 2023
Hansen believes that transaction fees will eventually become the main incentive for miners to continue long after the last BTC is mined.
“This is why as transaction fees become an increasingly important part of the Bitcoin mining economy, understanding transaction fee dynamics and forecasting them in the future becomes even more critical,” he said, adding:
“So it’s important to see fees increase over time, something Bitcoin Ordinals has, of late, helped with, for example.”
However, this change is likely still years away, given that no one currently mining will be alive when the last BTC block reward is received.
It will be a long wait to find out.
According to Hansen, based on the block discovery rate and halving process, which occurs roughly every four years, or every 210,000 transaction blocks, the last BTC will most likely be mined around 2,140.
A Bitcoin halving is a planned reduction in the rewards miners receive, with the next one currently projected to occur around April 2024. This will bring the reward per block down 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 as demand increases and supply remains fixed.
Hansen says that the price of BTC at 2140 will depend on unpredictable factors such as market demand, the regulatory environment, technological advances, and macroeconomic factors.
“The fact that all Bitcoin is in circulation can create scarcity, but whether this scarcity will translate into price increases is subject to market dynamics,” he said.
“As we look to a future where all Bitcoin has been mined, it is important to remember that Bitcoin was designed with this ultimate goal in mind.
“The gradual reduction of block rewards and the shift towards transaction fees are intrinsic to the protocol and represent an ingenious solution to ensure the continued security and viability of the network,” added Hansen.
Related: Rising BTC Transaction Fees Is A Good Thing, Shares A Bitcoin Educator
Jaran Mellerud, a research analyst at Hashrate Index, told Cointelegraph that as Bitcoin adoption and usage grows, transaction fees will rise dramatically and become the main source of revenue for mining companies.
Mellerud said that by the time the last BTC is issued, the block subsidy will already have been so minuscule that it won’t affect the coin supply significantly.
“Due to the huge demand for block space relative to the low supply of block space, transaction fees will have to skyrocket in a future hyperbitcoinization scenario,” he said, adding:
“If you don’t believe there will be high enough transaction fees in the future to justify the existence of mining, you don’t really believe in Bitcoin.”
What about fiat?
By the time the last bitcoin is mined, Mellerud believes its value will not be measured in US dollars or other fiat currencies.
He speculates that by then, fiat money systems will have long since collapsed, and Bitcoin could be the successor, becoming the global standard unit of account.
“In such circumstances, the only valid way to measure the purchasing power of Bitcoin is to look at how much energy one Bitcoin or one satoshi can buy,” Mellerud said.
“Just as we currently measure the purchasing power of the US dollar in terms of energy, barrels of oil,” he added.
A collapse of fiat money systems has long been predicted, fueled by the many problems facing the traditional financial system. As recently as March 2023, Silicon Valley Bank collapsed due to a liquidity crisis, followed by Signature Bank and Silvergate Bank.
Related: First World Debt Crisis Means You Can Expect More Pain Ahead
Before the March 2023 banking crisis, a February survey by business intelligence firm Morning Consult and commissioned by cryptocurrency exchange Coinbase found that most respondents were already disillusioned with the global financial system.
A large portion of those surveyed are disillusioned with the global financial system and want change. Source: Morning Consultation
Bitcoin might 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 a critical part of the ecosystem, but not all of them will survive, with some going out of business in the face of rising costs.
According to a March 24 report from Glassnode, since 2010, miners have already experienced long periods of unprofitability, with only 47% of trading days profitable.
According to data from Glassnode, miners have already experienced long periods of lack of profitability. Source: Glassnode
“I think it is conceivable that we will see some miners shut down or other manipulation techniques used in an effort to increase fees,” White said, adding:
“But I also imagine that will happen long before the last Bitcoin is mined, as the latest halvings will drive block rewards to the satoshi level.”
However, White also says that “a lot can happen in 120 years,” and BTC could fundamentally change over the next century.
White believes that by 2140, quantum computers will probably have broken the core encryption under Bitcoin, though he says engineers working on it have long known that it’s not quantum secure.
“That shouldn’t necessarily scare people because of this quantum security issue. Between now and 2140, there will have to be a major reworking of Bitcoin from the crypto layer up,” he said.
“At that point, the Bitcoin developer community will be able to assess whether or not we are on track to have an operational network based on transaction fees or if additional Bitcoin mining is necessary to ensure the security of the network,” White added.
White further speculates that while Satoshi Nakamoto’s white paper states that 21 million BTC is the supply limit and most concrete rule, it is likely that none of us will be alive in 2140 to enforce that rule.
He believes that cryptography boils down to coding and consensus; If the community believes that the transaction fee incentive is insufficient to maintain network security, future miners could theoretically extend the BTC hard cap beyond 21 million.
Related: $160K in the next halving? Model counts down to Bitcoin’s new all-time high
What effect this could have on the price is unclear, but either way, White believes that Bitcoin’s price will stabilize at some global price point that reflects inflation, with the biggest price movement occurring sometime in the next 120 years if one or more nations take it seriously as their reserve currency.
In that case, he says, it will “probably be independent of Bitcoin mining schedules,” and would be the strongest time to increase the price of BTC.
Related: US law protects institutions and exposes retail investors — Rep. Torres
“There are things we can’t even imagine could affect Bitcoin (wars and energy crises, obviously), but what if by then we are a true multi-planetary species and have to extend block production time to support solar system-level communication speeds,” White said.
“What I always find important is to focus on the most difficult problems that we are seeing today and do what we can to solve them. That could mean solving payments or digital ownership, or banking the unbanked – these are the issues to focus on now,” he added.
This post What will happen once all the BTC is mined?
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