On December 24, 2024, the number of mined bitcoins surpassed the 19,800,000 mark, leaving less than 1.2 million bitcoins remaining until the total supply is depleted.
After the 2024 halving, approximately 450 bitcoins are mined each day. According to one of the first websites to collect various Bitcoin data, Clark Moody, a milestone of 19.8 million bitcoins mined was reached on December 24.
As many of you may know, Bitcoin has a supply limit of 21 million units. Does this mean that all bitcoins will be mined soon and what will happen when the remaining supply runs out? Why is Bitcoin scarcity important? Can the bid limit be removed? These and other questions are answered below.
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When will the 21 million bitcoins be mined and what will happen next?
While almost 20 of the 21 million bitcoins were mined in the first 14 years of Bitcoin’s existence, the last remaining fractions of Bitcoin were not depleted until 2140. The reason is that the issuance of Bitcoin will decrease by about 50% once every four years. each time another 210,000 blocks are mined. The drop in BTC issuance is called a “halving.”
Starting in December 2024, each mined block unlocks 3.25 BTC as a mining reward. In 2140, this amount will fall below the smallest fraction of Bitcoin, known as Satoshi, one millionth Bitcoin particle. As Satoshi will be a tiny fraction of Bitcoin, the 2140 halving will effectively stop the issuance of bitcoins.
Mining is the core of the validity and security of the Bitcoin network, while mining rewards are the main incentive for miners to continue their problematic operations. Fortunately, when the issuance of new bitcoins stops, miners will continue to receive rewards. Instead of receiving newly minted coins, they will receive portions of the transaction fees charged by senders. It is worth saying that the fees paid by senders for transaction prioritization already make up a substantial part of miners’ rewards.
Why is Bitcoin scarcity important?
While inflation is not inherently bad, as it drives the economy when it is healthy, Bitcoin is often celebrated as a deflationary asset. While the government can print more dollars, thereby decreasing the value of the dollars it already owns, Bitcoin is coded so that its supply is immutable and limited to 21 million units.
As the total number of bitcoins will only decrease over time as more and more units become “stuck” in closed wallets forever, it is believed that the value of each unit will only continue to increase.
You may also be interested in: Why is Donald Trump asking the government not to sell Bitcoin?
Proponents of the stock-to-flow model claim that scarcity drives value. However, it is understood that scarcity is far from the only or the main driver of value. Can you take out a single unit of your own currency and expect it to be the most valued due to extreme scarcity? Probably not. Since Bitcoin already enjoys a high value, its scarcity forces buyers to bid more for each unit. That’s how halvings push up the price of BTC all the time.
Is it possible to remove the supply limit?
A three-minute educational video on Bitcoin, published by BlackRock in December 2024, sparked an online debate about the possibility and implications of removing the supply cap.
Removal is not impossible, as the Bitcoin network structure has already been edited several times through hard forks. So if the community working on Bitcoin improvements votes in favor of making Bitcoin inflationary and makes the necessary changes to the Bitcoin architecture, voilà, we may one day see inflationary Bitcoin.
Opponents of this measure claim that such changes would have turned Bitcoin into something completely different. More than that, they remind us that those who don’t want Bitcoin without a fixed supply can still use the classic version of Satoshi Nakamoto’s creation.
Why do you say there is no guarantee that the fixed supply will be changed? There is absolutely a guarantee. If they change it, Bitcoin forks, there will be two bitcoins. The old fixed supply system will continue to exist and that is what people will value.
– Bludex (@0xBludex) December 18, 2024
Why will the actual number of bitcoins in circulation never approach 21 million?
Many believe that Satoshi Nakamoto himself has large amounts of BTC mined in the early days, with some mentioning an amount of 1 million BTC. However, the bitcoins in Nakamoto’s identified wallet have not been moved since 2009, and millions of those frozen bitcoins are throughout the ledger.
According to the same Clark Moody website that we mentioned at the beginning, there are 220.31 ‘probably’ non-spendable coins. This means that more than 220 BTC can never be used as they are isolated as unclaimed rewards, null outputs, or other forms.
However, the word “probably” indicates that there are more “lost” coins. Various sources claim that between 3 and almost 8 million bitcoins are lost forever. According to the June 2024 CryptoSlate article, 7.7 million are lost or “obsessed.”
Bitcoins are lost all the time for various reasons: people lose access to their private keys, hardware and paper wallets are fatally damaged, coins are sent to invalid addresses, etc. It is understood that the number of lost bitcoins will continue to rise and fall. the level of bitcoins in circulation.
What are virgin bitcoins and why would anyone want to pay more for them?
2140 will see the end of an era of so-called “virgin bitcoins.” This term means bitcoins that have never been in use and therefore have a clean transaction history.
Virgin bitcoins are already immensely rare. The only way to obtain such Bitcoin is to buy it directly from the miner through a P2P service (since depositing a virgin Bitcoin in exchange would have tainted your transaction history). More than that, if the BTC portion was received while mining in the pool, it automatically cannot be “virgin” since the mining pool distributes rewards among the mining participants, i.e. miners do not receive these bitcoins from first hand
More than that, as soon as Bitcoin is included in an unspent transaction output (UTXO), it loses its virginity status. This happens as soon as the virgin bitcoin is shipped in parts.
Since virgin bitcoins are rare and difficult to come by, they are sold at higher prices than regular bitcoins. Why would anyone want to pay more to get a Bitcoin with a clean transaction history? The answer is not difficult to understand: institutional investors do not want to increase risk by purchasing bitcoins that were involved in criminal transactions. These bitcoins in the wallet can potentially damage your wealth. The only way to reduce these risks is to buy virgin bitcoins.
A prominent cryptocurrency writer, Nic Carter, questions the very existence of virgin bitcoins and notes that it is almost impossible to produce them. In his article, he dismisses the importance of a clean transaction history, citing venture capitalist Tim Draper’s purchase of bitcoins seized by the US government on the Silk Road market.
