On December 24, 2024, the number of mined bitcoins crossed the 19,800,000 mark, leaving less than 1.2 million bitcoins remaining until the entire supply is exhausted.
After half of 2024, around 450 bitcoins are mined per day. According to one of the earliest websites collecting various Bitcoin data, Clark MoodyDecember 24 saw the achievement of a milestone of 19.8 million bitcoins mined.
As many of you may know, Bitcoin has a supply cap of 21 million units. Does it mean that all the bitcoins will be mined soon, and what will happen when the remaining supply is exhausted? Why does Bitcoin scarcity matter, and can the supply cap be removed? These and other questions are answered below.
When will all 21 million bitcoins be mined, and what happens next?
While nearly 20 of 21 million bitcoins were mined within the first 14 years of Bitcoin's existence, the last fractions of Bitcoin will only be spent in 2140. The reason is that the Bitcoin distribution is going to drop 50% approximately once every four years. every time another 210,000 blocks are mined. The drop in BTC distributions is referred to as “halving”.
From 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, called Satoshi, a one-millionth part of Bitcoin. Since Satoshi is going to be a small fraction of a Bitcoin, the halving of 2140 will effectively stop the circulation of bitcoins.
Mining is at the heart of the legitimacy and safety of the Bitcoin network, and mining rewards are the main incentive for miners to continue their troublesome operations. Fortunately, when the distribution of new bitcoins stops, miners will still receive rewards. Instead of receiving new coins, they receive a portion of the transaction fees from the senders. It is worth mentioning that the fees paid by senders for transaction prioritization already make up a significant portion of miners' rewards.
Why does Bitcoin scarcity matter?
While inflation it's really not badbecause it drives the economy when it is healthy, Bitcoin is usually characterized as a deflationary asset. While the government can print more dollars, thus reducing the value of dollars you already have, Bitcoin is coded in such a way that its supply is inexhaustible and limited to 21 million units.
Since the total number of bitcoins will only decrease with time as there will be more and more 'segregated' units in the closed wallets forever, it is believed that the value of each unit will only keep increasing.
The stock-to-flow model advocates claim that scarcity drives value. However, it is understood that scarcity is far from being the only thing or the main source of value. Can you withdraw one unit of your own currency and expect it to be the most valuable due to extreme scarcity? Maybe not. Since Bitcoin already has a high value, its scarcity makes buyers bid for each unit more. That's how fifties move the price of BTC up all the time.
Is it possible to remove the supply cap?
A three-minute educational video on Bitcoin, released by BlackRock in December 2024, sparked an online debate about the possibility and implications of removing a hard supply cap.
The removal is not impossible, because the structure of the Bitcoin network has already been edited at different times through hard forking. Therefore, if the community working on Bitcoin developments vote to make Bitcoin inflationary and make necessary changes to the Bitcoin architecture – voilà – someday we will see Bitcoin inflation.
Opponents of this move claim that these changes would have turned Bitcoin into something completely different. In addition, they remind us that those who do not want Bitcoin without a fixed supply can still use the classic version of Satoshi Nakamoto's idea.
Why will the actual number of bitcoins in circulation never be close to 21 million?
Many believe that Satoshi Nakamoto himself kept large loads of BTC mined in the early days, with some citing an amount of 1 million BTC. However, the bitcoins in Nakamoto's named wallet have not been moving since 2009, and millions of bitcoins are thus frozen throughout the ledger.
According to the same Clark Moody website we mentioned at the beginning, 220.31 coins are 'provably' unwearable. This means that it will not be possible to use more than 220 BTC because they are isolated as unclaimed rewards, null data results, or other means.
However, the word “provably” indicates that more coins are “lost”. Various sources say that 3 to almost 8 million bitcoins are lost forever. According to the CryptoSlate Article June 20247.7 million are either lost or “held.”
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. the amount of bitcoins in circulation.
What are virgin bitcoins, and why would someone want to pay extra for them?
2140 marks the end of an era known as “virgin bitcoins.” This term stands for bitcoins that have never been used and, therefore, have a clean trading history.
Virgin bitcoins are already very rare. The only way to get such Bitcoin is to buy it directly from the miner through a P2P service (because investing virgin Bitcoin in exchange would ruin its trading history). In addition, if the share of BTC was obtained while mining in the pool, it cannot automatically be “virgin” because the mining pool distributes rewards among participants mining, ie, miners do not get these bitcoins directly.
In addition, as soon as Bitcoin is included in an unexpired trading product (UTXO), it loses its virginity status. It happens as soon as the bitcoin gold is put into parts.
Because virgin bitcoins are rare and difficult to obtain, they are sold at higher prices than normal bitcoins. Why would someone want to pay extra to get Bitcoin with a clean transaction history? The answer is not difficult to understand – institutional investors do not want to increase the risk by buying bitcoins that were involved in criminal transactions. Such bitcoins in the portfolio could harm their wealth. The only way to cut off these risks is to buy golden bitcoins.
Famous crypto writer, Nic Carter, questions as real bitcoins exist, noting that it is almost impossible to make them. In his article, he dismisses the importance of the history of clean transactions, citing the purchase of bitcoins seized by the US government from the Silk Road market by venture capitalist Tim Draper.
