Bitcoin is a decentralized digital currency that was created in 2009. Unlike fiat currencies like the U.S. dollar or Euro, Bitcoin has a limited supply that is not controlled by any central bank or government. There will only ever be 21 million bitcoins created.
This finite supply and lack of centralized control is part of what gives Bitcoin its appeal for many people. However, some wonder if we will eventually reach the limit and “run out” of new bitcoins to be discovered.
How new bitcoins are created
New bitcoins are created through a process called “mining.” Mining involves using specialized computer equipment to solve complex math problems that verify and secure transactions on the Bitcoin network. As a reward for contributing their computing power, Bitcoin miners receive newly created bitcoins.
Bitcoin’s code specifies that the reward for mining new blocks is cut in half approximately every four years. When Bitcoin was first launched, the mining reward was 50 bitcoins per block. It was reduced to 25 in November 2012 and again to 12.5 in July 2016. The next halving will occur in 2024, bringing the reward down to 6.25 bitcoins per block.
This regular reduction in reward ensures that the total supply of bitcoins cannot exceed 21 million. According to the Bitcoin protocol, 21 million is expected to be reached by the year 2140. At that point, mining rewards will go to zero and no new bitcoins will be issued.
Current status of bitcoin supply
As of October 2022, around 19 million bitcoins have been mined, leaving roughly 2 million left to be mined. At the current pace of issuance, it is estimated that the final bitcoin will be mined sometime around the year 2140.
The rate of new bitcoin creation and inflow into circulation will continue decreasing over time as we approach the 21 million cap. But since the mining reward decreases geometrically, it will still take over 100 years before the last full bitcoin is mined.
Here is a table showing the total bitcoin supply over time:
| Year | Total Bitcoin Supply |
|---|---|
| 2009 | 0 |
| 2010 | 7,200,000 |
| 2011 | 8,400,000 |
| 2012 | 10,500,000 |
| 2013 | 12,000,000 |
| 2014 | 13,500,000 |
| 2015 | 14,800,000 |
| 2016 | 16,000,000 |
| 2017 | 16,800,000 |
| 2018 | 17,500,000 |
| 2019 | 18,100,000 |
| 2020 | 18,600,000 |
| 2021 | 19,000,000 |
| 2022 | 19,200,000 |
As you can see, the number of total bitcoins in circulation is still far from 21 million. At the current pace of issuance, it would take over 100 more years before we reach the maximum supply.
Can bitcoin mining speed up?
Some people wonder if improvements in mining technology could speed up the rate at which new bitcoins are discovered and the total supply limit is reached.
It’s important to understand that Bitcoin’s mining difficulty automatically adjusts based on the overall computing power of the network. If more miners join, or existing miners increase their hash power, the Bitcoin protocol will respond by making the puzzles harder to solve, ensuring the rate of block production and new bitcoin issuance stays fairly constant over time.
This difficulty adjustment happens every 2016 blocks, or about every two weeks. It helps maintain network security and a predictable, limited bitcoin supply.
So while Bitcoin mining is a competitive industry, with miners constantly upgrading to faster hardware to gain a competitive edge, it doesn’t actually speed up how quickly new bitcoins are issued overall. The pace remains relatively steady thanks to the hardcoded supply schedule and periodic difficulty adjustments.
Bitcoin supply schedule versus demand
Another concern is whether the gradually decreasing bitcoin supply will be able to keep up with demand as adoption increases. Won’t this limited supply lead to high fees and volatility?
Bitcoin was designed to be divisible, so even fractional amounts can still be transacted. There are 100 million satoshis in 1 bitcoin. So even if 1 bitcoin becomes very valuable, you would still be able to send tiny fractions of a bitcoin on the network.
The lightning network, a layer 2 solution built on top of Bitcoin, also enables fast, cheap bitcoin transactions that are not limited by block space. As usage of lightning channels increases, bitcoin gains more capacity to handle higher transaction volumes.
While limited supply may increase Bitcoin’s price volatility compared to fiat currencies, the trajectory so far shows growing demand outpacing new supply as adoption spreads. Any short-term mismatches in supply and demand even out over longer periods.
Ultimately, its fixed supply makes Bitcoin more like gold or other commodities. And this scarcity is essential to its role as a store of value and hedge against inflation.
What happens if all bitcoins are mined?
Once all 21 million bitcoins have been mined, there will never be any new bitcoins (unless the protocol rules are changed). At that point, the blockchain will operate solely on transaction fees.
Miners will continue verifying transactions and recording them on the blockchain, but their incentive switch from block rewards to transaction fees. Bitcoin’s security will transition entirely from mining power to financial stake.
This future shift to a fee-driven network is often referred to as “digital gold mining.” Even once all bitcoins are created, successfully mining a block will still be required for transactions to be confirmed. Miners will survive on optional transaction fees paid by users sending bitcoin.
Of course, this event is still over 100 years away. It’s difficult to predict how miners, nodes and the overall Bitcoin network will operate at that time. But the intent is for fees alone to provide enough incentive for miners to keep securing the network as needed.
Some also believe that even if the block reward eventually falls to zero, technological innovation will reduce costs and improve efficiency in ways that will continue to incentivize mining. The reality is no one knows for sure how profitable “digital gold mining” will end up being decades down the road.
Can anything alter the supply schedule?
The Bitcoin protocol determines how quickly new bitcoins are minted and introduced into circulation. This schedule cannot be altered without near unanimous consensus from the Bitcoin community.
Changing something as fundamental as the supply schedule would require convincing nearly all network participants to adopt a software update representing the new rules.
Even a small minority continuing to use the old rules would effectively split Bitcoin into two incompatible networks. This is known as a permanent blockchain fork.
Most developers consider Bitcoin’s supply issuance and final cap of 21 million coins as set in stone. Altering such a core principle would risk undermining confidence in Bitcoin’s scarcity and monetary properties.
However, there are always hypothetical scenarios where network participants voluntarily adopt new rules. While highly unlikely, a future network upgrade could theoretically include something like:
– Removing the supply cap of 21 million coins
– Extending the mining reward beyond the year 2140
– Reintroducing block rewards after they fall to zero
– Creating new deviation parameters that fundamentally change the issuance model
Such profound changes to Bitcoin’s supply schedule have almost no chance of actually happening. There is an overwhelming consensus that Bitcoin’s finite scarcity gives it inherent economic value. Playing with the formula threatens to dilute Bitcoin’s value proposition as hard money.
Conclusion
Based on the programmed supply issuance and the network’s design, it is highly unlikely that we ever completely “run out” of new bitcoins. The flow of new bitcoins will decrease over time and eventually approach zero as we reach the 21 million cap.
But this moment is still decades away. Even when block rewards hit zero, Bitcoin’s blockchain will live on through transaction fees. Its predetermined supply schedule is widely considered sacrosanct, so the chance of it changing is negligible.
Provided that demand continues rising faster than the new supply, Bitcoin has some built-in economic traits that should maintain an appropriate incentive framework for miners. While Bitcoin is the world’s first truly scarce digital asset, the system was engineered to scale and become more efficient over time.