Some experts believe that even after the last batch of Bitcoin is mined, miners will still play a crucial role in the Bitcoin ecosystem. Satoshi Nakamoto mined the genesis block on January 3, 2009, creating the first 50 Bitcoins in history and ushering in a multi-billion-dollar industry centered around cryptocurrency mining. However, due to the limited supply of Bitcoin, the fate of miners after the last batch of Bitcoin is issued remains uncertain.
Bitcoin is generated through mining, a process that involves solving complex mathematical problems and verifying transactions on the blockchain network using computer hardware. In return for their efforts, miners receive a predetermined amount of Bitcoin as a reward for each transaction block they validate.
According to data from the Blockchain Council, over 19 million Bitcoins have been awarded to miners as block rewards, while Satoshi Nakamoto’s whitepaper states that only 21 million Bitcoins can be obtained. Once this limit is reached, miners will no longer receive rewards for validating transactions.
In an interview with Cointelegraph, Nick Hansen, the founder and CEO of Bitcoin mining company Luxor Mining, stated that while block rewards have disappeared, miners will continue to play a crucial role in verifying and recording blockchain transactions, but their compensation methods will evolve.
Currently, successfully validating a new block on the blockchain rewards miners with 3.125 Bitcoins, which is approximately $203,125 according to CoinGecko’s data (data has changed). Miners also receive transaction fees.
According to calculations shared by on-chain analytics company Glassnode in a tweet on May 1st, transaction fees and block rewards have brought miners over $50 billion in profits since 2010.
Hansen believes that transaction fees will eventually become the primary incentive for miners to continue mining after the last Bitcoin is mined.
“That’s why it’s important to understand the dynamics of transaction fees and predict their future changes as their importance gradually increases in the Bitcoin mining economy,” he said, adding, “So, seeing fees increase over time, like the recent Bitcoin halving, has been helpful.”
However, considering that current miners may no longer be alive when the last Bitcoin block reward is mined, this transition may still take several years.
According to Hansen, based on the discovery rate of blocks and the halving process that occurs approximately every four years (or every 210,000 transaction blocks), the last Bitcoin is most likely to be mined around 2140.
Bitcoin halving is the process of predetermined reduction in the rewards received by miners, with the most recent one occurring in April 2024. This will reduce the reward for each block to 3.125 Bitcoins.
In theory, by limiting the supply of Bitcoin, the value of each coin should increase as demand grows and supply remains fixed.
Hansen stated that the price of Bitcoin in 2140 will depend on unpredictable factors such as market demand, regulatory environment, technological advancements, and macroeconomic factors.
“All Bitcoins being in circulation could create scarcity, but whether that scarcity translates into price increases depends on market dynamics,” he said.
“When we look to a future where all Bitcoins have been mined, it’s important to remember that Bitcoin’s design takes this outcome into account. The gradual reduction of block rewards and the transition to transaction fees are inherent properties of the protocol, representing a clever solution to ensure the network’s continued security and viability,” Hansen added.
Jaran Mellerud, a research analyst at Hashrate Index, told Cointelegraph that as Bitcoin adoption and usage grow, transaction fees will increase significantly and become the main source of income for mining companies.
Mellerud stated that by the time the last Bitcoin is issued, the block subsidy will be minimal and will not have a significant impact on Bitcoin’s supply.
“Due to the massive demand for block space relative to the scarce supply, transaction fees must increase significantly in Bitcoin’s future scenario of widespread usage,” he said, adding, “If you don’t believe there will be high enough transaction fees in the future to justify the existence of mining, then you don’t truly believe in Bitcoin.”
When 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, the fiat currency system will have already collapsed, and Bitcoin may become the successor, serving as the global standard unit of account.
“In that case, the only effective way to measure Bitcoin’s purchasing power would be to see how much energy one Bitcoin or one satoshi can buy,” Mellerud said.
“Just like we measure the purchasing power of the US dollar with a barrel of oil,” he added.
For a long time, people have predicted the collapse of the fiat currency system, mainly due to the many problems faced by the traditional financial system. In March 2023, Silicon Valley Bank collapsed due to a liquidity crisis, followed by Signature Bank and Silvergate Bank.
Before the banking crisis in March 2023, a February survey conducted by business intelligence company Morning Consult for cryptocurrency exchange Coinbase found that the majority of respondents were disappointed with the global financial system.
Most respondents expressed disappointment with the global financial system and desired a change. Source: Morning Consult
Bitcoin may be different in 120 years
Pat White, co-founder and CEO of Bitwave, stated in an interview with Cointelegraph that miners will still be a crucial part of the ecosystem, but not all miners will survive, as some will face increasing costs that will force them to shut down.
According to a report by Glassnode on March 24, miners have experienced long periods of unprofitability since 2010, with only 47% of trading days being profitable.
White stated, “I think we might see some miners shutting down or employing other manipulation techniques to increase fees,” adding, “but I also envision that this might happen before the last Bitcoin is mined, as the last few halvings will bring the block rewards down to the level of satoshis.”
However, White also stated that “a lot can happen in 120 years” and Bitcoin may undergo fundamental changes in the next century.
White believes that by 2140, quantum computers may have already cracked Bitcoin’s core encryption, although he notes that engineers working on this have long known that it is not quantum secure.
“People don’t need to panic about this quantum security issue. From now until 2140, Bitcoin will need massive changes on the encryption level,” he said.
“By then, the Bitcoin developer community will be able to assess whether we are truly moving towards a fee-based network or if additional Bitcoin mining will be needed to ensure the network’s security,” White added.
White further speculates that while Satoshi Nakamoto’s whitepaper states a hard cap of 21 million BTC for the Bitcoin supply, no one among us may be alive in 2140 to enforce this rule.
He believes that cryptocurrencies come down to coding and consensus, and if the community believes that transaction fee incentives are not sufficient to maintain network security, future miners could theoretically extend the hard cap of BTC beyond 21 million.
It is unclear what impact this might have on the price, but regardless, White believes that the price of Bitcoin will stabilize at a price point reflecting global inflation, and significant price changes will occur in the next 120 years if one or more countries seriously adopt it as their reserve currency.
In that case, he said it would be “possibly independent of Bitcoin’s mining progress” and it would be the most certain moment to drive up the price of BTC.
“We can’t even imagine the things that could affect Bitcoin – there are obviously wars and energy crises – but what if by then we really are a multi-planetary species and we have to extend block production time to support interplanetary communication speeds?” White said.
“I’ve always believed it’s important to focus on the most challenging problems we see today and do our best to solve them. That could mean solving payment problems or digital ownership or providing banking services to the unbanked – those are the issues that need attention now,” he added.