Why will Bitcoin mining stop at 21 million?
From the day it was first created by Satoshi Nakamoto with the Genesis Block, Bitcoin has had a strict supply limit. The amount of Bitcoin that can be produced is fixed at 21 million. The final coin is expected to be mined in the year 2140. At the time of writing, 89% of the total supply, around 18.6 million coins, has been mined (is in circulation). After the final Bitcoin is mined in 2140, miners will not be able to earn any block rewards, and their only income will be fees received from the transactions they’ve verified.
Having a fixed supply means Bitcoin is less susceptible to inflation. The exact reason why Satoshi Nakamoto chose a limit the supply to 21 million is not explicitly known, but a mathematical approach might give us some answers.
Is the limit exactly 21 million? And why was this number chosen? Why not 22 million? Let’s look at the reasoning behind this number with four simple calculations:
- Let’s calculate the number of blocks created in each 4-year cycle (the halving period):
There are 8,760 hours in a year (24 hours x 365 days). There are therefore 35,040 hours in 4 years
6 blocks are created per hour. From this we can deduce that over 4 years 210,240 blocks will be mined.
- Let’s add up all the different block reward increments (halved every four years):
50 + 25 + 12.5 + 6.25 + 3.125 + 1.5625 (and so on) = 99.9984741210937
- Let’s multiply the total number of blocks created over four years by the combined block reward increments:
210.240 x 99.9984741210937 …. ≈ 21 million
There we have it! Approximately 21 million coins. The reason the figure is not exactly 21 million is that technically only 20,999,971.02187096 Bitcoin can be produced.