Bitcoin mining, simply speaking, refers to process of making new bitcoins through puzzle solving. It has computing systems that are equipped with specialized chips that compete to solve math puzzles.
Of course, you do not need to know the minutest details of mining to get started with bitcoin investments. There are top sites like Crypto Engines to help you with that and show you the way. However, if you have a general interest in mining and bitcoins, read on to find the answers to two of the most frequently asked questions about bitcoin mining.
Will the total number of bitcoins reach 21 million ever?
The total number of bitcoins isn’t expected to hit 21 million because the network utilizes bit-shift operators. These are arithmetic operators that round up the decimal points right down to the nearest small integer at the time of mining.
The rounding down might occur as the block reward for making a new bitcoin block gets divided in half, and the amount for the new reward gets calculated. This reward is expressed in terms of satoshis, with a satoshi equal to 0.00000001 bitcoins. Since satoshis are the smallest measuring unit in bitcoin network, you cannot split it in half.
So, the bitcoin blockchain with the job of splitting one satoshi in half for calculating a new reward is made to round down to the closest whole integer. The systematic rounding down of the bitcoin block rewards is the reason why the total bitcoins issued is probably going to be a bit shorter than 21 million.
As the number of bitcoins issued in each block is decreasing approximately by half every four years, the final bitcoin is going to be generated not before the year 2140. The total number of newly mined bitcoins per block was fifty when bitcoin came into being, and that has gone down to nearly six in May, 2020.
What will happen after 21 million bitcoins get mined?
As the highest number of bitcoins get mined, even when the number is a bit less than 21 million, new bitcoins will not be issued anymore. The transaction will keep on getting pooled in blocks to process. Bitcoin miners will be rewarded, but possibly just with transaction processing fees.
Now, bitcoin reaching the highest supply limit is going to impact the bitcoin miners. But the way they effect the miners will depend on how bitcoin evolves as a digital asset. If the blockchain processes lots of transactions in 2140, bitcoin miners might still get to generate profits from just transaction processing fees.
In case bitcoin is largely utilized as a store of value in 2140, instead of something for daily transactions, the miners can still profit from it. The disappearance of the block rewards and low transaction volume can still help the miners. Miners get to charge higher transaction fees for processing high-value transaction, or larger batches of transactions, along with highly efficient ‘layer 2’ blockchains working with the bitcoin blockchain for facilitating daily spending in Bitcoin.
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