One of the most curious facts related to Bitcoin mining is that it will last until the year 2140. A quick look at the numbers of the extraction of this digital currency will inevitably lead to the most common questions related to the crypto world.
During the first decade of Bitcoin’s existence, more than 18 million out of a total of 21 million were mined. Why then will the remaining 3 million be mined in 120 years? The answer to this question is found in the almost perfect machinery that the mysterious Satoshi Nakamoto organized.
There are a significant number of factors that prevent the remaining 3 million coins from being mined at the same rate as the previous ones. The most important of them are the halvings and the increasing difficulty of the Blockchain network. The latter makes the mathematical problems that miners must solve to compute a block increasingly complex.
Bitcoin mining must adapt to a tight supply
The first thing that comes to mind when talking about how long Bitcoin mining will last, is the scarcity of this currency. As highlighted above, there is a total number of Bitcoins (21 million coins), of which it will never be passed, this makes this cryptocurrency a scarce asset.
Another resulting aspect is the fact that its value tends to increase over time. This is due to the fact that Bitcoin is becoming more popular and its usability is widespread, while its supply remains unchanged. In other words, when the demand for a scarce good is increasing, its value tends to rise.
That is why the price of Bitcoin, with the passage of time, has an upward trend and will remain so. As the years go by, the value of a satoshi (one millionth of a Bitcoin) will be as high as the price of a Bitcoin is now. Don’t you think so? In 2010 there were also many who did not believe it.
However, this does not answer the main question, why will Bitcoin mining last 120 more years if there are only 3 million coins left to mine?
The direct influence of Halving
The Halving, is an event programmed in the Bitcoin Blockchain, which cuts the reward paid by the network for each mined block in half. In theory, the rewards that the network granted to miners were 50 BTC per block. With the first Halving of 2012, the payment for each block was reduced to 25 BTC.
In the second Halving of 2016, the rewards were cut to 12.5 BTC per block. In the third and most recent of these events, (May 2020) the rewards dropped to 6.25 BTC per block.
The Halving, in short, is an event that occurs every 210,000 blocks, which is equivalent to approximately every four years. This event cuts the rewards in Bitcoin to miners by 50%. That is, every four years for the next 120, there will be a cut in that reward.
By the year 2040 during the eighth Halving, the reward that the network will pay for each block will be 0.1953125 BTC. This is a handful of satoshis that each miner will receive (of the hundreds of millions that have already been incorporated to date).
To access these fractions of Bitcoin, machines of several hundred TH / s will be needed. In this way, the answer to why Bitcoin mining will last until the year 2140 becomes clearer.
The difficulty of the network
Another aspect that influences the prolongation of Bitcoin mining for 120 more years is the difficulty of the network. Although it does not have the same visible impact as Halving, it plays its part ruthlessly in what many call the “natural selection” of mining.
Every 2016 blocks, which is equivalent to approximately every two weeks, the difficulty of the network is adjusted automatically. The function of this is to keep the average time to mine a block stable at 10 minutes.
The dynamics of the difficulty adjustment is that, when there is an increase in the Bitcoin hashrate, it increases. On the contrary, when the hashrate goes down, the difficulty goes down. The level of the hashrate, for its part, is measured according to the number of new miners who join the mine or who retire.
In that sense, when a massive number of new miners join and the hashrate goes up, the time to mine a block starts to decrease. In response, the network increases the difficulty of mathematical operations, so that, no matter how many miners there are, mining a block takes 10 minutes.
On the reverse side, when thousands of miners leave the game and the hashrate goes down, the time to mine a block increases excessively. The network automatically lowers the difficulty of math puzzles, so that it is easier to mine and process a block back to the 10-minute average.
Data to take into consideration
- Halving is an event that occurs every four years and consists of cutting the reward in half for each block processed.
- The difficulty of the network is adjusted every two weeks and it seeks to maintain the rhythm of a mined block every 10 minutes.
- These are two of the factors that extend the life span of Bitcoin mining over time.
- The quantitative shortage of Bitcoin pushes its price into a permanent uptrend.
- The unit price of a satoshi, the smallest fraction of the coin, tends to equal the price of Bitcoin over time.