How Many Bitcoin Are Still Left?

With each new Bitcoin adoption cycle, newcomers are faced with a vast array of questions. Many of these relate to Bitcoin’s supply, in particular the unique aspects surrounding Bitcoins fixed 21,000,000 supply cap and the mechanics of Bitcoin's halvening.

This article helps answer these questions and explores why these topics are so crucial to Bitcoin’s scarcity and subsequent value proposition.

Understanding Bitcoin's Supply Schedule

Bitcoin is unique in that the total supply is capped at 21 million coins. Satoshi Nakamoto, the creator of Bitcoin, designed this to emulate precious commodities like gold, which have limited quantities. The concept behind this capped supply is to create a disinflationary asset that resists inflationary pressures commonly seen in fiat currencies.

But why 21,000,000 coins? The truth is that no one really knows why Satoshi chose this number as Bitcoins supply cap, but it was chosen to ensure scarcity, reinforcing the notion of Bitcoin as a finite commodity. The psychological impact of knowing there's a limited supply can drive market demand and increase its perceived value.

Bitcoin's economic model is also disinflationary in nature, meaning its inflation rate decreases over time rather than increasing or remaining constant. This is different from deflationary, which means the supply is decreasing. Bitcoin's disinflation is achieved through the mechanism of the Bitcoin halving.

Bitcoin Halving

Approximately every four years, the Bitcoin block reward (compensation miners receive for mining a new block) is cut in half. This process is called the “halving”, so naturally by the end of the first halving, an entire 50% of the entire bitcoin supply was mined. Initially, block rewards were 50 bitcoin, but due to these halvings, each subsequent change in supply yielded smaller bitcoin block rewards i.e. 25 BTC (2012), 12.5 BTC (2016), 6.25 BTC (2020).

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Now, in 2024, the block reward is 3.125 BTC. Each halving event reduces the rate at which new bitcoin are created, contributing to Bitcoin's disinflationary nature.

Timeline and Mining Schedule

Approximately 19.7 million bitcoin have been mined to date, leaving just about 1.3 million left to be mined. The last bitcoin is projected to be mined in 2140.

The halving schedule and mined bitcoin are crucial for understanding Bitcoin's disinflationary nature and the impact on its supply. During the epoch starting in 2032, more than 99% of the bitcoin supply will have been issued. The final 1% will take more than 100 years to mine!

What Happens After Bitcoin Reaches 21 Million?

The transition of incentive for miners from block rewards to transaction fees will be pivotal once all 21 million bitcoin are mined. Bitcoin block rewards incentivize miners to secure the network through the Proof-of-Work (PoW) consensus mechanism. After 2140, miners will rely entirely on transaction fees for their compensation.

While detractors have suggested that having no block reward would disincentivize miners, this is not true. There have already been times when the transaction fees have exceeded the block reward, and in upcoming epochs, this will likely become the norm. When the final block reward is issued, transaction fees will likely be many times the block reward.

This consistent but gradual transition from miners' primary earnings being reward-based versus fee-based shows the network's natural maturing and strengthening.

How Bitcoin's Supply Scarcity Impacts Value

Bitcoin is not valuable just because it’s one in 21 million, but rather because the entire network is a credible, secure way to transact value globally. Such systems are in increasingly high demand in today’s economic setting where inflation runs rampant and politicians have little discipline when it comes to inflating their money supply. However, without the finite supply, each bitcoin would have a significantly diminished value.

Bitcoin's capped supply contributes to its status as a digital store of value. This aspect of Bitcoin has been popularized as "digital gold." However, gold's supply is only scarce; it is not a truly finite resource. There is thus an economic incentive for the market to continue allocating capital as technology evolves to extract additional gold. Bitcoin's total supply however, is fixed, making it superior to gold.

A liquid market is also essential for an asset to have value (as a potential medium of exchange). Deep liquidity ensures that large transactions don't impact market prices significantly. With the rise of the bitcoin ETFs and increasing demand from individual, institutional, and nation-states, market depth seems to be improving substantially.

Conclusion

Understanding how many bitcoin are still left to mine is crucial for anyone interested in purchasing bitcoin. The interplay between Bitcoin’s fixed supply and dynamic demand underpins the asset’s resilience and growing stature within the global financial system.

In addition, understanding Bitcoin’s supply cap and market depth helps to explain why Bitcoin continues to captivate people, institutions, and countries as a long-term savings or investment tool.