When will the Last Bitcoin be Mined?

Bitcoin is an asset with a limited number of coins – 21 million, which will be fully in circulation in the year 2140. Before then, their issuance is regulated by the algorithm built by the creator Satoshi Nakamoto, which is based on the concept of Proof of Work and halving. At the time of writing, the amount of Bitcoin in circulation amounts to around 19,827,234 units.

Thanks to open-source code, incentives for miners, continuous developments and a sophisticated game theory inherent to the system, the security, distribution and resilience of the protocol seem unassailable.

However, contrary to what may appear from this introduction, not everyone within the community shares this optimistic vision. To date, miners are incentivized to keep the network safe and validate transactions mainly through the issuance of new Bitcoins and, secondarily, by transaction fees. Although 2140 is not imminent, users, developers, and investors are already rightly wondering about the sustainability of the network. 

In this article, we will explore the mining process, the effects of halvings, predictions about the future, and what will happen after the last Bitcoin is mined.

How does Bitcoin mining work? 

Bitcoin transactions and the creation of new Bitcoin are validated through a complex process called mining. Mining relies on software applications that nowadays run on specially designed hardware, and miners around the world connect their mining devices to form a global peer-to-peer network. Together, they compete to add new blocks to the blockchain by compiling transactions into blocks. However, these blocks must meet the consensus rules enforced by validation nodes and other miners. If a block contains invalid transactions or does not comply with the network’s criteria, it is rejected, causing the miner to waste computational resources and electricity.

Just as gold miners need picks and shovels to extract gold, this new digital version of miners also needs some tools to “mine” Bitcoin, in this case: mining hardware and energy. Miners are owners of powerful computers who contribute, each with their computing power and energy, to keeping the network of a cryptocurrency based on “Proof of Work” such as Bitcoin safe.
Mining involves solving complex mathematical puzzles. The miner’s computers (called nodes) collect the transactions that users carry out and which are deposited inside a sort of temporary global container called “mempool” every ten minutes (Bitcoin’s fixed “block time”) and then insert them into the blocks that then make up the blockchain. Computers then compete to solve a complex cryptographic puzzle to be the first to validate the new block for the blockchain. 

The mining process step by step

Mining is the process by which blockchain blocks are built. The “miners” take the transactions not yet executed from the “mempool”, i.e. the virtual place where a set of transactions is temporarily stored waiting to be validated.

Here are the main steps of the mining process:

• Transaction selection: The miner selects transactions from the “mempool”, often giving priority to those with higher fees.
• Hash function: The miner applies a hash function (a sort of “black box” that transforms one string into another completely different string) to the transaction identifier. The miner must find an output from the hash function that has a certain number of leading zeros.
• Proof of Work: The miner changes a parameter (adding a random number) to the hash function’s input until it gets an output that meets the leading zero requirement. This process is called “proof of work”, and the random number entered as input to receive the output with a predetermined number of zeros is called a “nonce”. 
• Difficulty: The BTC mining difficulty, or the number of zeros required at the beginning of the hash, is adjusted based on the total computing power of the miners in the network. The goal is to maintain an average time to create a block (a set of transactions) of around 10 minutes for Bitcoin. If there are more miners, the protocol requires input with more zeros, so the difficulty increases.
• Validation and reward: Once a correct string is found, the miner sends the block to other miners. If the miners agree on the correctness of the work done, the miner that performed the proof of work receives a reward, which includes new cryptocurrencies (in the case of Bitcoin, generated via the “coin base transaction”) and fees paid for the transactions included in the block. The “coin base transaction” is the first transaction in the block, where the miner sends himself the reward.

All this can be verified through a classic Bitcoin network explorer. Analyzing any block of the network, we can identify all the details described:

• The hash of the block: 000000000000000000001dc221ad33aad1fce179ff8e55b01641db50e9bbe1baf
• The nonce that generated it: 4,002,775,681
• The difficulty: 110,568,428,300,952.69
• Transaction fees: 0.08560499 BTC
• The coin base transaction of 3.21060499 BTC;
• A number of other interesting details.

What are halvings and how do they affect mining? 

The Bitcoin protocol is based on two concepts related to scarcity.

The first concept, already anticipated, is the limited supply of Bitcoin. The protocol establishes that the maximum number of bitcoins in circulation must never exceed 21 million; therefore, it is impossible for more to exist.

The second concept is referred to as halving. Approximately every 210,000 blocks (approximately every four years), the reward for mining Bitcoin, the so-called “block reward”, is halved. By reducing the speed of new Bitcoins put into circulation, you get an opposite effect on its inflation, which slows down until it stops completely after the last Bitcoin has been mined.

In May 2020, the amount of new bitcoins added to the network (every 10 minutes) via virtual “mining” was halved from 12.5 to 6.25. In April 2024, it decreased further to around 3,125, and the process will continue until 21 million coins have been mined (this is expected to happen in 2140). At that point, miners will rely solely on transaction fees to validate blocks.

When will the last Bitcoin be mined? 

The total number of mineable Bitcoins decreases exponentially with each halving. If the network maintains a constant pace, continuing to build blocks on average every 10 minutes, the process will extend until 2140, when the last fraction of Bitcoin will be mined.

What variables could influence the final date?

Factors such as mining difficulty, number of active miners, and possible protocol updates could speed up or slow down the expected timeline. In fact, blocks are not created exactly every 10 minutes. There will be periods where the timing is higher or lower, which depends on the number of miners participating in the process. In any case, these factors could vary the date by a few days or weeks. It is quite likely that the year will remain 2140.

For example, in moments of high on-chain activity, the profitability of miners increases and new operators will probably turn on the machines, increasing the number of miners in activity, which determines a decrease in the average time to create a block. In order to return to the 10-minute average, the difficulty is increased. The difficulty automatically adjusts approximately every two weeks. This is why it is estimated that the year in which the last Bitcoin will be mined is 2140, but there is no precise date.

What will happen when all Bitcoins have been mined? 

One of the main questions investors are wondering about is the future of miners. Currently, miners receive a double reward: the block reward (new Bitcoins) and transaction fees. Once the last Bitcoin is mined, their only source of income will be the transaction fees paid by users.

In order to keep the network safe and sustainable, transaction volume and fees need to be high enough so that miners still have an economic incentive to keep the machines running and keep the network safe and operational. To date, undoubtedly, a level of adoption has not been reached such as being able to maintain the structure with transaction fees alone. There were moments when mining was particularly profitable, but they were temporary moments born from the development of particular narratives, which created particular hype and FOMO among users. The latest event of this kind had ordinals as protagonists, which literally caused transaction fees to explode. However, the hype for the ordinals lasted a few weeks, and to date, the transaction fees have returned to standard levels, certainly not sufficient to guarantee the security of the network without the incentive of the block reward.

However, if the commissions are not enough to cover energy and operational costs, some miners could abandon the network, potentially affecting the security of the blockchain. However, as already mentioned, the difficulty would automatically adjust to maintain healthy block production. On the other hand, a low number of miners represents a threat to network security as it facilitates the possibility of carrying out the frightening (and unlikely) 51% attack.

Will Bitcoin still be safe?

The security of Bitcoin depends on the number of active miners. Currently, the Bitcoin network represents the blockchain with the most participants and the block reward ensures a constant incentive, but when this disappears in a few years due to the various halvings, there will be a natural transition to a security system based mainly on transaction commissions and from 2140, exclusively on them.

If the commissions are not sufficient, many miners will turn off the machines and the network could become less secure, exposing themselves to risks such as the 51% attack. However, it must be considered that carrying out such an attack is already extremely expensive nowadays and unlikely with the current size of the network.

 The practical difficulty of a 51% attack on Bitcoin

One scenario in which a 51% attack could be beneficial to a group of miners is one in which the costs of the attack (for example, the electricity needed for mining and the necessary hardware) are lower than the gains that can be achieved by manipulating the blockchain. For example, the group of miners could be able to rewrite the last block of the blockchain to cancel payments made by them, so as to obtain the service or good paid for and regain possession of the Bitcoins spent.

The attack would, therefore, affect a small segment of the blockchain as, despite controlling 51% of Bitcoin’s hashing power, it would be extremely difficult to rewrite the Bitcoin blockchain from the beginning. In the example given above, let’s assume that the person receiving the payment is satisfied with the first confirmation before sending the sold good. But if he wanted to wait 4 confirmations, then the attackers would have to perpetuate the attack for much longer, investing even more resources.

In fact, to rewrite the entire blockchain starting from block 0, an attacker would need an enormous amount of hashing power, much higher than that of all the miners currently operating on the network. Furthermore, such an attack would require a huge amount of time and resources, as the attacker would have to generate a huge number of valid blocks and convince all other nodes in the network to accept his version of the blockchain. Furthermore, he would have to prepare the attack in secret, which is the most difficult thing. First, the amount of money needed to carry out the attack is so large that only a nation state could plan it. However, in a democratic form of government, it would be impossible to allocate a huge amount of funds without arousing suspicion in the eyes of voters (among whom there undoubtedly are Bitcoin users). Secondly, ASICs would disappear from the market, raising other doubts, the hashrate would explode and it would obviously be necessary to build places to attach the machines equal to the size of two nuclear power plants. Doing all this in total secrecy would be impossible, and as soon as a potential 51% attack is hypothesized, all the great minds behind the development of Bitcoin would work to modify just a few lines of code and make the attacker’s expense worthless.

In summary, while a 51% attack is theoretically possible, the complexity and enormous amount of resources required to carry it out make it highly unlikely in practice. For this reason, although we cannot even hypothesize what will happen in 2140, we can certainly say that to date, Bitcoin remains the project with the greatest resistance to the double spending of digital money currently developed by man.

The role of transaction commissions in the long term

A key factor in the future of the Bitcoin network will be transaction volume. With the growing use of the network and the development of scalability solutions such as the Lightning Network, the number of transactions is expected to increase significantly.

If demand for block space increases, the fees could be enough to incentivize miners to continue securing the network. However, it remains to be seen how the market will adapt to this transition and whether the Bitcoin ecosystem will be able to evolve to maintain an adequate level of security in the long term. It is important to note that the problem will not only occur in 2140, but the transaction fees will already be relevant in just 20 years, as the halving will have clearly continued to halve the rewards every 4 years. 

Catapulting us into 20 years, if the value of Bitcoin in dollar terms remains stable at current values ​​as well as the demand for block space, then the block reward would represent an insufficient incentive already in the 2030/40 decade and Bitcoin could be considered a failure.

But in reality, 20 years in technology represents a geological era. Suffice it to say that 20 years ago the Android operating system did not exist, internet users were ⅓ of the current ones, cell phones were not touchscreens and televisions were blocks of one square meter. On the other hand, technological development will most likely contribute to lowering costs related to mining through the use of renewable energy or new disruptive technologies that we cannot even imagine after 20 years. Therefore, lower rewards could still be sufficient for the miners of the future who, in the face of lower costs, will be able to maintain a certain degree of marginality. In all of this, we are taking it for granted that the mining market will remain as it is today!

The fate of Bitcoin: Survival or extinction?

At Trakx, what we wanted to convey through this article is that there are so many variables at play that talking today about the problem of the sustainability of the network in 10 years is just a “pourparler”. The absence of a block reward sufficient to remunerate miners could actually kill Bitcoin, but it would simply represent the consequence of the social failure to adopt this technology. The security budget represents the natural death of Bitcoin, whose only cure is mass adoption.

Ultimately, the question could be simplified like this: Bitcoin will only survive if humanity chooses to use it. If it doesn’t happen, then Bitcoin will fail miserably. But why should humanity refuse to use the most revolutionary protocol ever created?