Bitcoin mining: Nineteen millionth Bitcoin was mined over the weekend.
Summary
Bitcoin mining: we are about to hit the ceiling
In fact, at the time of writing this article, a total of 19,002,284 BTC have been created, whereas until last Friday there were less than 19 million.
The main financial feature of BTC is the insurmountable ceiling of the number of BTC that will be created: 21 million. So by now there are only just under two million BTC left to be created.
Currently, 6.25 are still being created for every block that is mined and added to the Bitcoin blockchain, or about 900 per day, as roughly one block is mined every 10 minutes.
However, from around April 2024 this rate will be halved, bringing the number of BTC created per new block to 3.125.
These halvings takes place on average every three years and ten months, or every 210,000 mined blocks to be precise. By the process of halving, the next few decades will reach the point where it will no longer be possible to create individual Satoshi in this way.
Satoshi: how they work
A Satoshi is the smallest unit that a Bitcoin can be divided into, equal to one hundred millionth of a BTC. When the reward for miners validating a block becomes less than 1 Satoshi, by the process of halving it, it simply cannot be issued anymore.
This path could take as long as 120 years, so if the first 19 million BTC were created in just over 13 years, it will take more than a century to create the remaining 2 million.
Currently, at the rate of 900 BTC created per day, 328,500 are created in a year, which is about 1.7% of the existing 19 million. So in this era the inflation of the Bitcoin money supply is well below even the 2% target typical of central banks on fiat currencies.
To be fair though, it is estimated that at least 15% of the BTC created in the past should be considered unusable, so the true percentage increase of actually existing and usable BTC is still over 2%.
The future of Bitcoin mining
From April 2024, this increase will effectively be more than halved, dropping well below 1%. With such low rates of money supply inflation, it will be close to zero inflation, although often the bulk of the BTC created and given as a reward to miners are quickly put on the market to be sold to finance the high expenses of the miners themselves.
These halvings have so far always led to a reduction in the supply of BTC on exchanges the following year, driving up the price. However, it is worth noting that this trend has already been declining sharply, particularly since the last halving in 2020, so it may ease off considerably in the future and perhaps even disappear altogether at some point.
It is also worth noting that the reduction in revenue for miners should, in the long term, lead them to reduce the costs of mining, i.e. to consume less electricity. Therefore, in the long run the energy consumption of Bitcoin mining might decrease drastically.
