Bitcoin has a maximum supply of 21 million. It has utility as a network that allows you to safely transfer and store value without the need of a central authority.
These two components are what give Bitcoin its incredible value. The Bitcoin network is maintained by Bitcoin miners who help verify and validate Bitcoin transactions within the network. The more miners in the network the more secure the network is. These miners are incentivized by what is referred to as mining reward. The rewards are the newly added Bitcoin in circulation. Since the maximum supply of Bitcoin is 21 million, it means the mining rewards will come to an end, and since miners are majorly incentivized by the mining rewards, what happens after the final coin is mined? Will Bitcoin grind into a halt?
When the first Block was mined on 3rd January 2009 i.e. “The GENESIS Block”, the mining reward valued at 50BTC. This reward is halved at about every four years. This is just to control the supply concept of Bitcoin in circulation. Since then, there have been three halving and the current mining reward values at 6.5BTC. The total number of Bitcoin that has already been mined is about 18.7million leaving just 2.3 million Bitcoin to be mined. After the final coin is mined, will the Bitcoin miners be incentivized enough to still be part of the mining process??
The last Bitcoin to be mined will be in the year 2140. Bitcoin skeptics believe that as the mining reward trends to zero, Bitcoin miners will start withdrawing from the mining process jeopardizing the Bitcoin security model, which will diminish the value of Bitcoin proposition itself.
While there will be no new Bitcoin to be rewarded to miners after the last coin is mined, Bitcoin adoption grows overtime, demand to transact within the network will grow and the transaction fees will rise to partially reward miners. It is possible that Satoshi chose the 21 million Bitcoin limit for mathematical reasons. It is also possible that he chose this limit based on the m1 money supply which was around 21 Trillion Dollars in 2009. If this is so, then Satoshi’s intention is, each Bitcoin to eventually be worth $1M.
If this is attained, the value of transaction fees on the Bitcoin network will be incentive enough for miners to still be part of the mining operation, more likely attracting even more people to join the network, despite of the 0 mining block reward.
Bitcoin skeptics argue that transaction fee might not be incentive enough for miners to still be part of the network, since Bitcoin transactions are confirmed at roughly 10 minutes per transaction, making it difficult for Bitcoin to scale to be used as a medium of exchange.
Bitcoin technology component in its nature allows for development of systems that helps its functionality better, the Lightning Network on the Bitcoin layer two protocol has allowed Bitcoin to be transacted instantly with as many transactions as you can make all across the world. This is possible now to adopt Bitcoin as a medium of exchange. With this kind of technologies, Bitcoin will provide more utility options creating more Bitcoin transactions in the network. As result, miners will still have work in the network.
Bitcoin mining set up can be very costly. Also, the equipment used to make the mining set up like the ASIC computerized devices, tend to consume much energy. When there is 0 mining rearward, it might be a concern to people that miners might not be able to pay for energy cost for mining operations.
However large mining operations are able to negotiate directly with energy providers to source cheapest possible energy. A miner is also free to relocate their mining operations wherever they can source cheap energy.
Other Countries like El Salvador, who have fully adopted Bitcoin as a legal tender, are also harnessing volcano energy and is used for mining operations. This gives miners the option to resolve to green and clean energy.
Bitcoin growth and adoption results to its incredible value. The technology aspect of Bitcoin channels human ingenuity to making it better.