Bitcoin: Is there a limit on mining and has it been reached?

Bitcoin could pass for the eighth wonder of the world judging by its legendary price spikes in the last two years. There is no way it cannot grab the attention of anyone interested in moneymaking.

You might wonder -how is bitcoin made? You will find answers below. You just have to get a headstart and establish a mining operation in a country where power isn’t too expensive, and you’ll be set for life.

Actually, scratch that. You’ll be set… until bitcoin run out. Because yes, there is a limit on the number to be mined. In fact, specifications for many cryptocurrencies stablish a limit to liquidity after which no more tokens can be issued.

But what is this limit? Why is it there? Will we reach it soon?

How many bitcoins has been mined?

If you ask where did bitcoin come from? The answer is Satoshi Nakamoto. Though unknown because right now, no clear identity exists, the intention for bitcoin is found in the bitcoin paper.

First of all, let’s start with the most important number: The hard cap on Bitcoin tokens is 21,000,000, and that is the max number of bitcoins that will be created. So, what happens when bitcoin reaches 21 million? After that number of tokens have been issued, no more tokens will enter the market.

Total number of bitcoin

More Bitcoin have been mined than you think. As of July 2019, over 17,810,000 Bitcoin have been mined. So, how many bitcoins are there left.? That leaves room for only a bit over 3 million bitcoin to be mined – meaning over 4/5 of bitcoin have already been issued.

But that’s not too problematic, at least not if you’re worried about the Bitcoin blockchain going the way of the dodo due to reaching the limit. As it happens, the Bitcoin specifications have both instructions on what the blockchain will do once the limit is reached, and a way to ensure that won’t happen anytime soon.

What happens when the limit is reached? Can we not mine anymore after that?

What happens when the twenty-first millionth Bitcoin has been issued is… well, nothing. Nothing happens and nothing changes. The Blockchain keeps operating as usual.

This is because of how bitcoin are made and mined, and because of what the mining process means.

Mining bitcoin is, in essence, a competition between all miners to try and solve a complex mathematical problem that can only be brute forced. Whoever solves the problem is then assigned a block – that is, a set of transactions they must authenticate. Once the transactions are authenticated, the user is rewarded with a certain amount of crypto.

Which leads us to mining. The Bitcoin algorithm states that a new coin will be issued for every certain number of blocks. This new coin is used to pay the miners and complements the transaction fees, which are also awarded to miners.

So when no more coins are issued, what will happen is that miners will get paid from transaction fees exclusively. Since Bitcoin will be an inflationary market until then (because new currency is being issued,) these transaction fees should go up over time.

But there are only three million left. When will this be reached?

In a long time. The current expectation is that the last bitcoin will be mined at around 2140. That’s over a hundred years for now, and enough of a reason for people not to worry too much – the blockchain should be able to maintain itself long enough.

Wait, Bitcoin started in 2009, ten years ago. Seventeen million have been mined since. How can the last three take so long to mine?

That’s the beauty of the specification. Bitcoin’s reward scheme isn’t a flat number set in stone. Instead, the blockchain was coded to double the amount of blocks required every roughly four years. In practice, what this means is that, even if the amount of bitcoin miners remains stable, the issued supply constantly goes down.

This leads to a system where diminishing returns are the rule. So, to calculate how many bitcoins in a block is not straightforward. Every 210,000 blocks that are processed the reward for miners per block is halved.

For example, during the first 210,000 blocks, 50BTC were issued for each block that was processed. The second set of 210,000 blocks only issued 25BTC/block. The third one issues 12.5 BTC/block. The fourth one will issue 6.25 BTC/block, and so on.

So, how many bitcoins will there be?

While almost eighteen million BTC have been issued in a decade, the expectation is that it will take over a hundred years to issue the remaining three million units.

How many Bitcoin are mined every day?

So, you can as well ask how long does it take to mine one bitcoin? On the average, about 1800 BTC are mined every day as of July 2019. And this translates to 1 bitcoin in 48 seconds. Yes, it looks like a lot – but the Bitcoin market has at least a million miners, with different degrees of processing capacity. In truth, most people mining bitcoin are barely making enough to keep the lights on, and we’re at a point where becoming a millionaire by mining BTC is not likely to happen.

What about lost bitcoin? Can Bitcoin be lost?

Yes, Bitcoin can be lost, although not in the usual sense. Since Bitcoin aren’t physical items they can’t be misplaced or destroyed. What can happen is that crypto owners can lose access to their wallets – essentially locking their crypto out of the market.

It is estimated that the total amount of bitcoin lost this way is about 4 million, and most of them can’t be put back into the market.

Why can’t we put them back or reabsorb them?

Because it’s impossible to know for sure whether a wallet owner has lost access or they’re just holding their crypto. Some wallets haven’t had any movement for years, but their owners still have access to them. Reabsorbing them would imply stealing from those people.

Moreover, since it’s impossible to prove that a wallet is yours other than by accessing it, people who have lost access to their Bitcoin can’t in any way reclaim it. It’s just lost unless they figure out a way to regain access.

Can the Bitcoin limit be extended?

It would appear now that the bitcoin limit or hard cap cannot be modified, although this would require a change in the blockchain specifications to happen. What experience tells us, however, is that no changes in the BTC blockchain ever go smoothly, and in every single occasion this has been tried, it has resulted in a hard fork and a new bitcoin-based cryptocurrency (altcoin) appearing.

How many Ethereum are there?

Some other cryptocurrencies have limits just like Bitcoin, but some don’t. Ethereum, for example, doesn’t – the rate at which new ETH are issued might change over time but there is no hard cap on new tokens being issued. This doesn’t mean they’ll always be issued, since specifications can be changed, but it does mean that for now such a move isn’t expected.

As of July 16, 2019 there were 106,919,188 ETH in circulation.

Was limiting Bitcoin tokens a good idea?

This is the part nobody knows yet, and why cryptocurrencies vary on their approach. Historically, markets based around currency have always been inflationary – that is, every year more currency is printed, which in turn lowers the value of the existing currency.

If you ask why was bitcoin created? I will say that Bitcoin’s endgame is to avoid the trap of modern currencies that derive their power by fiat. Paper money is pumped into circulation by government decision without a carved-in-the-stone-justification.

By eventually not issuing bitcoin anymore, leading to a deflationary market – that is, a market where currency increases in value every day instead of decreasing is created. It is actually already happening since, even when new BTC are being issued every day, said amount isn’t enough to cover the market demand for them. The reported bitcoin total value is determined by multiplying the total bitcoin in circulation by the market price. This is also known as market capitalization.

Last Lines

If Bitcoin mining as an activity increases or decreases, the end date for bitcoin mining could be pushed further back or further ahead. It has already happened: Initially, estimates said the last Bitcoin would be mined by October 2140.

Currently, estimates say it will instead be mined by May 2140. It’s a small difference, but an important one. The market shifts and, as it does so, same goes for the amount of bitcoin mined per day.

A mining cap for bitcoin can be viewed as good or bad. Irrespective of how you look at it, you could be right. Sadly, for now Bitcoin isn’t a large enough market to know this, and even if it was, its wild swings in value mean we can’t use it as a study.

But perhaps one day, as cryptocurrency prices stabilize, we will. And then we might know for sure whether Satoshi was right when coding a hard cap to the BTC token market or not.

Sources:

https://www.investopedia.com/tech/what-happens-bitcoin-after-21-million-mined/

https://www.blockchain.com/en/charts/total-bitcoins

https://www.investopedia.com/terms/b/bitcoin-mining.asp

https://blockonomi.com/bitcoin-deflation/

https://www.coindesk.com/deflation-and-bitcoins

https://www.ethos.io/what-are-miners-cryptocurrency-mining