Bitcoin mining questions: What happens when Bitcoin is completely dug?
Bitcoin mining has once again become hot this year, with new ant mining machines and Avalon mining machines entering the field, but this has also caused some miners to think. That is, the total amount of bitcoin is only 21 million. What happens if he is dug up?
Even today, Bitcoin is still the most popular encrypted digital currency in the world, and a large number of investors use it as a money-making machine in the global market, and can be obtained through mining. However, due to its deflationary nature, its money supply is extremely limited. Yes, only 21 million bitcoins can be dug up. This limitation usually triggers a new debate about what happens after all bitcoins have been dug up.
January 13, 2018 marks an important milestone in the Bitcoin ecosystem, as the total number of bitcoins that have been dug up has reached 16.8 million. This milestone is indeed significant because it has been converted to 80% of the total amount of Bitcoin dug up so far. With only 20% of the mining supply left, calculations show that by 2040, miners will be able to reach the limit of 21 million.
Then, the problem has arisen again, what will happen? Can the Bitcoin ecosystem survive in the future? Is this still profitable for miners?
How bitcoin mining works
Bitcoin mining is a process of computing a hash function in which a computer is used to solve complex algorithms. In each successful solution, a new transaction block is created and added to the blockchain. The blockchain is actually a public record that contains all bitcoin transactions.
When bitcoin transactions occur, they are first broadcast over the network and then added to the blockchain by miners. Therefore, the hash function plays a crucial role in determining which things will get priority, because if everything does not correspond to a block. If the mining process stops, the entire system may crash.
To compensate the miners' efforts, new bitcoins are awarded to them. In addition, miners receive specific transaction fees associated with all transactions they confirm in a particular block. This means that the miner gets two payments:
First, dug out new bitcoin
Second, charge transaction fees
This process looks very smooth and we understand it easily. Interestingly, there is a limit to the total number of bitcoins dug up, which raises the issue we talked about earlier in the introduction. So let's try to find some answers.
What if all the 21 million bitcoin mining unions were dug up?
Perhaps the direct impact of Bitcoin supply restrictions will depend on the miners themselves. Critics say that once we mine the last bitcoin, miners can no longer get a lot of rewards for the mining work they do. Moreover, if this happens, miners may have to rely on transaction fees to maintain operations.
Under the impetus of this kind of viewpoint, the miners will find that it is unbearable, so only a part of the miners will be left behind. The argument for this argument is that only transaction costs are insufficient to enable miners to maintain financial reimbursement after the mining process is completed. However, in the future it is very likely that mining and transaction costs will break even.
It is not difficult to imagine that mining chips will become more efficient in a few decades. As a result, the burden on the miners will be greatly reduced, so that mining can be achieved at a meager initial cost. In addition, transaction fees are expected to increase, making it easier for miners to survive.
The process of halving the next mining award will take place on May 24, 2020. Halving is a complex factor in bitcoin mining. Now, the reward for a block is 12.5 bitcoins, but in May 2020, this number will become 6.25 bitcoins. Halving occurs once every four years. Therefore, the Bitcoin mining award will tend to zero.
How will it affect bitcoin prices?
There have been several factors driving Bitcoin prices to rise to record highs in a few months. While no one knows exactly how crypto coins will continue to spread in larger financial markets, it seems that the limited supply of money will cause its prices to continue to rise.
In addition, there are piles of bitcoins that will never move around the world. Moreover, the maximum number of these bitcoins belongs to Satoshi Satoshi who actually created Bitcoin.
At a time when demand for bitcoin has soared globally, it may have been deliberately retained.
How does Bitcoin survive after Bitcoin is dug?
Well, basically, there are three key pillars that can be expected, and once we have the last bitcoin mining and bitcoin supply to reach its maximum limit, the Bitcoin ecosystem will continue to operate. They are described below and how they can help maintain the function of the ecosystem.
Miners who are part of the Bitcoin network can be used not only to mine new blocks, but also to validate transactions. Anyone interested in Bitcoin transactions is obligated to pay a certain transaction fee. In addition, when someone is interested in making a quick trade while skipping the queue, they must also bear some extra costs.
As the Bitcoin network continues to be popular, we also see these costs rising. Although their low level is very low compared to hash rewards, we can expect them to rise over time. Therefore, we can expect transaction costs to grow sufficiently in the future to ensure that miners remain on the Bitcoin network and that the network continues to thrive.
2. The value of Bitcoin
In the ideal case, the value of Bitcoin needs to increase significantly. In fact, this will be the only option for transaction costs, enough to motivate miners. Interestingly, the structure of Bitcoin continues to increase its value, no matter how many bitcoins are dug up, or how many bitcoins remain, it has not been dug up.
Due to the limited money supply, it is believed that the demand for Bitcoin will increase, and as the demand increases, the value will automatically rise. In turn, an increase in the value of money will increase the fees that miners can earn. In addition, with a higher bitcoin value, users will be ready to pay higher fees to ensure a quick confirmation of their transactions.
3. Bitcoin mining cost
As technology continues to evolve, we may see a significant reduction in future mining costs. Moreover, when it happens, it will also lead to a drastic reduction in speculative trading of miners. Since a higher return on investment will still make the business profitable, the operating costs are lower, and even lower returns than today will be accepted.
Our final conclusion is that even if bitcoin mining totals 21 million and there are no more block rewards, bitcoin miners actually have several ways to keep profitable. As block rewards are gradually reduced, miners will have enough time to adapt to themselves based on transaction costs rather than the revenue generated by the bitcoins they mine.