What Will Bitcoin Miners Do When All Bitcoin Are Mined?
Will Bitcoin miners, responsible for securing the network, shut off after the year 2140 when there is no more block reward?
Bitcoin miners are responsible for packaging the network’s transactions into a block. Approximately every 10 minutes a Bitcoin miner finds a block, earning the Bitcoin block reward (currently at 6.25 Bitcoin). Every 210,000 blocks the block reward halves, until it asymptotically reaches zero. There will be no new Bitcoin mined after the year 2140. Given that Bitcoin miners expend energy in order to find a block and include the network’s transactions in that found block, will it be profitable for them to do so when all the bitcoin are mined and there is no block reward (also known as block subsidy)?
The question on whether a miner decides to keep mining is answered every single day by all miners, based on a list of variables. There are many more variables than just the block reward, and some of these variables include:
How efficient is the ASIC hardware?
What is the current profit margin?
How is competition moving in the space?
What is the cost of electricity?
What are predictions for future prices?
What are the current block rewards and transaction fees?
If a Bitcoin miner determines they can no longer profitably compete to mine Bitcoin, they may decide to shut off their ASIC machines. As unprofitable miners turn off their machines, the network will eventually adjust difficulty downwards (assuming all else stays equal), to a point that miners on the margin of profitability may turn their machines back on. This creates a cycle of flushing out the most inefficient miners and dynamic readjustment of the difficulty to allow miners to compete in Bitcoin’s mining algorithm.
For example, if 50% of the network decided to turn off their machines (similar to what happened during the China mining ban during June 2021), blocks would come out more slowly (approximately every 20 minutes) for the next 2015 blocks, then difficulty would readjust so the average block time would be back to about 10 minutes. Any miner that kept mining during this period would become more profitable, earning about double the amount of block rewards they normally would as the difficulty drops by half.
This process will happen throughout the lifetime of Bitcoin, regardless of block reward. In addition to block reward, miners are also paid a transaction fee. Currently the average transaction fees per block are 0.12 BTC1. Once the block subsidy ceases, the calculations on whether to keep mining or not will still continue, but simply omit the block reward as part of the calculation.
As the value of bitcoin rises, the value of the block subsidy and transaction fees also rise. It is estimated that by the year 2140 once all the bitcoin are mined, the transaction fees will still be sufficiently profitable to incentivize enough miners to keep the network secure. Even if 90% of miners were to go offline, the network would still be secure - we know this because the network was successfully secure at 1/10th of the present Terahash in past years.
Resources
Bitcoin onchain metrics, including miner revenue: https://www.theblockcrypto.com/data/on-chain-metrics/bitcoin
Recent blocks and associated fees: https://live.blockcypher.com/btc/
Bitcoin mining stats, including average transaction fees: https://bitbo.io/
https://bitbo.io/