Bitcoin is the first and largest digital currency by market cap, with a limited supply of 21 million coins. The creator of Bitcoin adopted this strategy to mimic the great scarcity of precious metals, including gold. Satoshi Nakamoto mined the first 50 Bitcoins on 3rd January 2009 and made the first steps into an industry that would become huge over the years. However, even if the miners benefited greatly from the mining operations, their fate after they will mine the last digital coin remains unclear.
Bitcoin functions on a proof-of-work (PoW) consensus mechanism, where new digital coins are issued with the help of a process called mining, where miners verify the transaction on the blockchain by solving complex mathematical problems. For the energy and effort they put into making the blockchain function, miners are rewarded with an amount of BTC after validating the transaction and generating new blocks. Bitcoin will reach its supply limit around the year 2140, when the blockchain will no longer produce new digital coins. At first, the Bitcoin blockchain rewarded miners with 50 BTC, but that amount is cut by half every four years to maintain the scarcity of the platform. So, the reward became 25 after halving in 2012, 12.5 in 2016, and lowered to 6.25 BTC on 11th May 2020. The last halving, which occurred in April 2024, reduced miners’ rewards even more, and now miners receive only 3.125 BTC after they validate a transaction. All these events have a direct effect on the current Bitcoin price.
But what do you think will happen after Bitcoin reaches its supply limit?
Why are miners interested in Bitcoin mining?
Bitcoin networks continue to function with the help of miners, who participate effectively in the growth of the ecosystem, and they do that for a variety of reasons, and the following represent some of them.
Financial returns
The most obvious reason miners are interested in the mining process is for financial profit, as miners receive rewards after they solve a complex mathematical problem, making the blockchain validate the transaction and add a new block to the network. At first, the rewards offered to miners were 50 BTC, so miners could benefit a lot from the rewards, which is the force that made them so interested in the mining process.
Supporting decentralization
Cryptocurrencies function on blockchains, which are decentralized platforms that central authorities like the government or banks don’t control. Miners also want to participate in the mining process to support the decentralized nature of cryptocurrencies, which offer many benefits compared to centralized options. And if more miners join in the mining process, they can contribute to a wider acceptance of decentralized possibilities, ensuring that the platform remains resistant to external control and censorship.
Benefit from a long-term investment-strategy
Miners also see the mining process as a long-term investment strategy, as they believe that the value of digital coins will appreciate in the following years. Although cryptocurrencies are highly volatile, and no one can predict exactly what value they will reach, Bitcoin is very likely to increase its price in the future because it has stayed in the market for the longest and it is the most secure digital coin that investors can add to their portfolios.
What will happen when all the Bitcoins are mined?
Bitcoin has a limited supply of 21 million coins, and after that amount is reached, miners will no longer issue new digital coins. This event will undoubtedly impact miners, but we cannot say exactly how much they will be affected, as those factors depend a lot on how Bitcoin will evolve in the future. A very likely scenario is that Bitcoin transactions will continue to be processed, and miners will still be rewarded but only with transaction processing fees.
If Bitcoin in 2140 will act more as a store of value than a medium of exchange, miners could profit by charging high fees to process transactions.
The shift to transaction fees
When Bitcoin reaches its supply of 21 million digital coins, the mining rewards will end, and the transaction fees will represent the only incentive for miners. The transaction fees will ensure the ongoing viability and security of the platform, even if miners lose their block rewards. Bitcoin has increased a lot from the first moment it was launched, and it is expected to continue to grow as well in the future, and this is why the transaction space on the platform will probably rise, which can lead to a surge in the transaction fees.
What are the purposes of the Bitcoin Halvings?
The halving events occur once every four years when the blockchain reduces the block reward offered to miners by half. These events are made to maintain the scarcity features of Bitcoin and to decrease the rate at which miners issue new digital coins. They can pose a lot of questions about the overall security of the platform and the economic implications for miners. However, some factors could help ease the offset losses of the mining process a little so that the miners will still secure the network and have a profit, including cheaper energy sources and technological advancements.
The end of BTC mining will be a pivotal moment for the crypto landscape, even if it raises questions about the loss of profitability for miners. The BTC scarcity is a unique feature of the blockchain that can influence its adoption and value, which makes some people compare Bitcoin with gold.
Last remarks
The mining of the last digital coin will represent a significant moment for the entire Bitcoin platform, as BTC will go from an inflationary economic model to a deflationary one. While this event will impact the rewards for users, miners, and the entire crypto ecosystem, Bitcoin will surely find a way to navigate all the challenges that might appear on the way. After all, it isn’t for nothing that Bitcoin is the largest digital coin by market cap.
