What happens when all Bitcoins are mined?

Bitcoin miners, who verify transactions and create new blocks by solving cryptographic puzzles, are pivotal to the network’s security and functionality. Their motivation largely stems from block rewards, initially set at 50 BTC when Bitcoin launched, but designed to halve every 210,000 blocks—or approximately every four years—as part of Bitcoin's controlled supply strategy.

Ref: https://dune.com/queries/2027178/3355723

Amidst Bitcoin's price surges and its growing mainstream adoption, mining has become a profitable venture. According to The Block, current daily revenue for Bitcoin miners, even at levels below their peak, averages around $48 million, yielding approximately $0.061 per TH/s.

https://www.theblock.co/data/on-chain-metrics/bitcoin/bitcoin-miner-revenue-daily

Ref: https://www.theblock.co/data/on-chain-metrics/bitcoin/bitcoin-miner-revenue-per-th-s-7dma

In November, miner earnings rose to $1.21 billion, an 18.6% increase from October, with the majority—$1.17 billion—coming from block rewards and an additional $38.73 million from transaction fees.

Considering that block rewards currently exceed transaction fees by more than 30 times and, under Satoshi Nakamoto's rules, the maximum supply of Bitcoin is capped at 21 million coins with the final Bitcoin expected to be mined around 2,140, a critical question emerges: What happens when all Bitcoins are mined? Will miners continue to support the network?

A look at miner revenue’s resilience

Bitcoin miners face challenges every four years with the halving event, which cuts their block rewards by 50%. Despite this, rising Bitcoin prices and decreasing energy costs might keep mining profitable. Eric Anziani, COO of Crypto.com, believes that increased cryptocurrency adoption and advancements in mining efficiency and renewable energy will help offset smaller block rewards, enabling miners to continue operations and secure the network.

Post-April halving, although Bitcoin mining revenue initially halved, it rebounded to January levels by November, with Bitcoin's price breaking the $100,000 barrier—a milestone that seemed distant earlier in the year.

Ref: https://www.theblock.co/data/on-chain-metrics/bitcoin/bitcoin-miner-revenue-monthly

A closer examination of revenue records reveals instances where transaction fees surpassed block rewards, notably on April 20, right after the latest halving. This shift coincided with the introduction of the Bitcoin Runes protocol, which allows the creation of Bitcoin-native digital commodities, including fungible tokens like memecoins.

(More details in our previous blog )

Ref: https://dune.com/queries/3031249/5038578

Ref: https://dune.com/queries/2057738/3404196

The emergence of ordinals and BRC-20 in 2023 also increased transaction fees, boosting them from 0.19 BTC to 4.85 BTC in just two months. This surge was evidenced on May 7, 2023, when transaction fee revenue for three Bitcoin blocks exceeded block rewards, a rarity not seen since December 22, 2017.

Ref: 21Shares

Such instances highlight the evolving possibilities within the Bitcoin ecosystem, despite its traditionally restrictive scripting language that limits complex applications. Industry experts like Nick Hansen, CEO of Luxor Mining, are optimistic about the future. He asserts that transaction fees will become the primary incentive for miners once all Bitcoins are mined, emphasizing the importance of adapting to innovations like Bitcoin Ordinals that drive fee increases.

More possibilities beyond

From the outset of Bitcoin's creation, Satoshi Nakamoto presciently noted in the whitepaper: “Once a predetermined number of bitcoins becomes available in circulation, transaction fees alone could sustain network incentives. At that point, the Bitcoin network will be completely immune to the perennial economic problem of inflation.”

Jaran Mellerud from Hashrate Index projects a bold future where Bitcoin might replace fiat currencies by 2140, suggesting that Bitcoin's value could be measured by its energy purchasing power, similar to how we gauge the dollar today.

Pat White, CEO of Bitwave, points out the challenges in Bitcoin mining, highlighting the increasing operational costs that might not be sustainable for all miners. As technological advancements like quantum computing progress, they could challenge Bitcoin's security, possibly requiring reassessments of its mining needs.

Furthermore, White speculates on the long-term economic role of Bitcoin, considering potential changes to the capped supply of 21 million coins and predicting significant price fluctuations. He suggests that Bitcoin could stabilize in response to global inflation, especially if adopted by nations as a reserve currency.

116 years is a long time, for Bitcoin, technology, and regulations to grow and change. All thoughts aside, Bitcoin is now entering the mainstream view with the endorsement of the newly-elected US President Donald Trump. Bitcoin’s potential and future path is still waiting to be etched out.

116 years is a long time for technology, regulations, and innovations to evolve and mature. All conjectures aside, Bitcoin is entering the mainstream with endorsement from newly-elected US President Donald Trump. The path forward is as promising as it is uncertain, inviting stakeholders to actively participate in defining Bitcoin’s legacy.

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