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In the mining landscape, Bitcoin represents a beacon of scarcity, with over 93% of its total supply already mined, as the upcoming fourth halving approaches, which will mark a new era of decreasing rewards, the allure of digital gold as a store of value intensifies.
Summary
Bitcoin mining prepares for the next halving
As the digital gold of the modern era, Bitcoin continues to fascinate the financial world with its unique characteristics and its scarcity-based model. With the passing of halving events, the supply of this leading cryptocurrency becomes increasingly limited, marking a crucial moment in its evolution.
Currently, 93.6% of the total Bitcoin supply has been extracted, leaving only 1.34 million bitcoins to be extracted. This milestone marks the beginning of a new era of scarcity, reshaping the narrative surrounding the world’s most famous digital asset.
The upcoming halving event scheduled for this year is expected to further exacerbate the scarcity of Bitcoin. With the mining reward for a block set to decrease from 6.25 BTC to 3.125 BTC, miners will have to deal with a significant reduction in the incentives previously available.
This adjustment represents a stark contrast to the early days of Bitcoin, when miners could earn as much as 50 BTC per block from 2009 to 2012. The journey to this point has been nothing short of extraordinary. By April 22, 2010, a quarter of the 21 million available Bitcoins had already been mined.
On December 14, 2011 miners extracted about half of all available BTC. The three-quarters threshold was reached on July 29, 2015. On December 13, 2021, the mining process had circulated 90% of the total bitcoins, showing the constant march towards scarcity.
The circulating supply of Bitcoin
Currently, the supply of Bitcoin is equal to 19,656,761.74 BTC, of which a significant portion is held by various entities, from public and private companies to governments, to exchange-traded products and funds, as well as decentralized finance (DeFi) and smart contracts.
According to the data from bitcointreasuries.net, these groups collectively own 2,494,501 BTC. Furthermore, cryptoquant.com reports that just over 2 million BTC are deposited on exchange platforms, for a total of approximately 2,003,753.08 BTC.
However, it is essential to recognize that not all of these availabilities are easily accessible. A part of the supply is made up of the so-called “bitcoin zombies”, coins that have remained inactive in wallets for long periods, potentially lost but not definitively declared as such.
According to estimates, there are approximately 1.4-1.7 million zombie bitcoins in circulation. Taking into account these dormant coins and other locked or inaccessible deposits, it becomes evident that a significant portion of the Bitcoin supply is out of reach for the average person.
In perspective, the trajectory of Bitcoin scarcity becomes even more pronounced. The halving event expected for 2028 will further reduce mining rewards to 1.5625 BTC per block.
By February 20, 2035, it is expected that 99% of the 21 million Bitcoins will have been mined, leaving approximately 20,790,000 BTC in circulation.
At this point, miners will receive just 0.78125 BTC per block and by 2036, the reward will further decrease to 0.390625 BTC at the seventh halving.
This gradual reduction in mining rewards highlights Bitcoin’s commitment to scarcity and represents a clear departure from the inflationary trends of traditional fiat currencies.
Conclusions: the new era of Bitcoin
While Bitcoin continues to consolidate its position as a store of value and hedge against inflation, its evolving landscape highlights a fundamental shift in the financial paradigm.
The concept of scarcity, once overlooked in the realm of digital assets, is now at the center of Bitcoin’s ethics, driving demand and reshaping investors’ perception. With only a fraction of its total supply still to be mined, Bitcoin is on the brink of a new era, defined by scarcity, resilience, and lasting value.
With over 93% of the total supply already mined, the decrease in rewards highlights Bitcoin’s commitment to honoring its finite nature.
With the decrease in rewards for mining and the decrease in remaining stocks, the concept of scarcity becomes more pronounced, consolidating Bitcoin’s status as a sought-after store of value in the digital age.
Furthermore, the constant march towards the exhaustion of the maximum limit of 21 million BTC highlights the resilience and enduring appeal of Bitcoin.
Its scarcity-based model is in stark contrast with the inflationary trends of traditional fiat currencies, offering investors a hedge against economic uncertainty and a beacon of financial sovereignty.
As we venture into the era of Bitcoin, characterized by decreasing rewards and greater scarcity, the role of cryptocurrency as a cornerstone of the digital economy becomes increasingly evident.
With each halving event, Bitcoin reaffirms its position as the ultimate digital gold, a scarce and precious asset destined to shape the future of finance for generations to come.