Satoshi Nakamoto mined the genesis block on January 3, 2009, minting the first 50 bitcoins (BTC) in history and launching a multi-billion dollar industry centered around cryptocurrency mining. However, due to the limited supply of bitcoins, the fate of miners after the last batch of bitcoins is issued is unclear.
Bitcoins are created through mining, a process involving computer hardware to solve complex mathematical problems and verify transactions on the blockchain network. To reward miners for their efforts, each block of transactions is rewarded with a predetermined amount of bitcoins.
according to According to the Blockchain Council, more than 19 million BTC have been awarded to miners in the form of block rewards, while according to Satoshi Nakamoto’s white paper, only 21 million are available. Once this cap is reached, miners will no longer be rewarded for validating transactions.
Despite the loss of block rewards, miners will continue to play an important role in validating and recording transactions on the blockchain, but how they are compensated will change, Nick Hansen, founder and CEO of bitcoin mining firm Luxor Mining, told Cointelegraph in an interview.
Currently, successfully validating a new block on the blockchain rewards miners with 6.25 BTC, worth approximately $188,381 at the time of writing, according to to CoinGecko. Miners also charge transaction fees.
according to Fees and block rewards have netted miners more than $50 billion since 2010, according to calculations shared in a May 1 tweet by on-chain analytics firm Glassnode.
since #bitcoinSince inception, miners have earned $50.2B in total revenue from block subsidies and fees, with historically estimated input costs of $36.6B.
This makes the miner’s historical gross profit margin $13.6B (+37%). pic.twitter.com/TYvBSZbsRo
— glassnode (@glassnode) May 2, 2023
Hansen believes that transaction fees will eventually become the main incentive for miners to continue mining long after the last bitcoin has been mined.
“This is why, as transaction fees become an increasingly important part of the bitcoin mining economy, it becomes even more important to understand transaction fee dynamics and predict the future,” he said, adding:
“So it’s important to see fees increase over time, for example, bitcoin serial numbers have helped with that recently.”
However, this transition may take years, as the current miners will still be alive when the last BTC block reward is received.
take a long time to know
According to Hansen, based on the block discovery rate and the halving process (which occurs roughly every four years or every 210,000 transaction blocks), the last BTC will likely be mined around 2140.
Bitcoin halving refers to the planned reduction of rewards received by miners, and the next halving is currently expected to occur around April 2024. At the time of writing, this reduces the reward to 3.125 BTC per block, or roughly $94,190.
In theory, by limiting the supply of bitcoins, the value of each currency should increase as demand increases, while supply remains fixed.
Hansen said that the price of BTC in 2140 will depend on unpredictable factors such as market demand, regulatory environment, technological progress and macroeconomic factors.
“The fact that all bitcoins are in circulation could create scarcity, but whether that scarcity translates into price increases depends on market dynamics,” he said.
“As we look to a future where all bitcoins are mined, it’s important to remember that bitcoin was designed with this ending in mind.
Hansen added: “The gradual reduction of block rewards and shift to transaction fees is inherent to the protocol and represents an ingenious solution to ensuring the continued security and viability of the network.”
related: Rising Bitcoin transaction fees is a good thing, says Bitcoin educator
Hashrate Index research analyst Jaran Mellerud told Cointelegraph that as Bitcoin adoption and usage grows, transaction fees will increase significantly and become a major source of revenue for mining companies.
Mellerud said that by the time the last BTC is issued, the block subsidy will be minimal and will not have a significant impact on the token supply.
“Due to the huge block space demand relative to the scarce block space supply, transaction fees will have to skyrocket in future hyperbitcoinization scenarios,” he added:
“If you don’t believe in the future that transaction fees will be high enough to justify mining, then you don’t really believe in Bitcoin.”
What about Fiat?
Mellerud believes that when the last bitcoin is mined, its value will no longer be measured in dollars or other fiat currencies.
By then, he speculated, the fiat currency system would have long since collapsed, and Bitcoin could be the likely successor as the global standard unit of account.
“In this case, the only valid way to measure the purchasing power of bitcoin is to look at how much energy one bitcoin or satoshi can buy,” Mellerud said.
“Just like we currently measure the purchasing power of the dollar in terms of energy, barrels of oil,” he added.
The collapse of the fiat currency system has long been predicted due to the many problems faced by the traditional financial system. Just in March 2023, Silicon Valley Bank collapsed due to a liquidity crisis, followed by Signature Bank and Silvergate Bank.
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Business intelligence firm Morning Consult commissioned a February survey by cryptocurrency exchanges ahead of the March 2023 banking crisis Coinbase The majority of respondents were found to be already disillusioned with the global financial system.
Bitcoin may not be the same in 120 years
Pat White, co-founder and CEO of digital asset platform Bitwave, said in an interview with Cointelegraph that he believes miners will remain an important part of the ecosystem, but not all miners will survive, and some miners will be shut down due to rising costs.
according to A report from Glassnode on March 24 shows that since 2010, miners have experienced a long period of unprofitability, with only 47% of trading days being profitable.
“I think we may see some miners being shut down or using other manipulation techniques to raise fees,” White said, adding:
“But I also think this will happen before the last bitcoin is mined, as the last couple of halvings will bring block rewards down to satoshi levels.”
However, White also stated that “a lot can happen in 120 years” and that BTC could change radically in the next century.
White believes that by 2140, a quantum computer will likely be able to break bitcoin’s core encryption, though he says engineers working on it have long known it is not quantum safe.
“It doesn’t have to scare people with quantum security concerns. Between now and 2140, Bitcoin has to undergo a major overhaul from the encryption layer up,” he said.
White added: “At that point, the Bitcoin developer community will be able to assess whether we can actually have a network based on transaction fees, or whether additional Bitcoin mining is required to secure the network.”
White further speculates that while Satoshi Nakamoto’s white paper states 21 million bitcoins as the supply cap and the most specific rule, by 2140, none of us may be alive to enforce that rule.
He believes that cryptocurrencies can be boiled down to coding and consensus; if the community believes that the transaction fee incentive is not enough to ensure network security, future miners can theoretically expand the BTC hard cap to more than 21 million.
related: $160,000 at the next halving?Model counts down to record Bitcoin all-time high
What effect this will have on prices is unclear, but in any case, White believes that the price of bitcoin will stabilize at a price point that reflects global inflation, and that if one or more countries are serious about electing bitcoin as their reserve currency, a significant price move will occur sometime within the next 120 years.
In this case, which is “probably independent of the Bitcoin mining program,” he said, it would be the most solid moment to push the price of Bitcoin higher.
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“Some things we can’t even imagine could affect Bitcoin — obviously wars and energy crises — but if we are a truly multi-planetary species by then, we have to extend block production times to support solar system-scale communication speeds,” White said.
“I’ve always thought it’s important to focus on the most difficult problems we have today and do what we can to solve them. That might mean solving payments or digital ownership, or banking the unbanked — those are the issues that need attention now,” he added.
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