January 13th 2018 marked an important milestone for Bitcoin Mining when 16.8 million Bitcoins (BTC), or 80 percent of the entire Bitcoin supply, had been mined.
This means only 4.2 million Bitcoins, or just 20 percent, are left to mine until Bitcoin’s 21 million supply cap is reached.
BTC has a 21 million Bitcoin mining cap built into its protocol by Satoshi Nakamoto, introduced in the 2008 White Paper, as a way to introduce digital scarcity to cryptocurrency.
With this cap in place, more Bitcoin mining would mean more scarcity was produced in the market.
In theory scarcity creates demand, making the coins more valuable, and once 21 million bitcoins have been mined, it will become even harder to obtain them, making each coin, on paper at least, more valuable.
The question in my mind though is why would they have any value at all?
It seems to me that the initial excitement and potential for continued growth is pretty much over. Bitcoin actually serves no purpose at all other than as a token for speculation.
After all it’s most unlikely that it can ever become a viable alternative currency, it’s just too volatile and unlikely ever to achieve the velocity required to make it sustainable. It really doesn’t have any raison d’etre.
If you can’t buy anything with Bitcoin, other than the up and coming alt coins, which initially struggle to gain acceptance in the cryptocurrency exchanges, then, once the alt coins with a real purpose start their ascendency and are recognised as genuine and useable currencies, where does that leave Bitcoin?
Miners involved in Bitcoin mining currently receive a 12.5 BTC reward for every block that they mine, and we all know how expensive that is in terms of the electricity consumed in mining for bitcoin.
All Bitcoin miners are constantly seeking more efficiency.
But Nakamoto’s protocol requires that the mining reward is halved every 210,000 blocks, or approximately four years.
The next miner halving will take place within two years, approximately in early June 2020 depending on hashrate, bringing the rewards down to 6.25 BTC per mined block.
That, I suspect, is going to make it very difficult for most involved in Bitcoin mining to keep their heads above water.
What’s your thoughts? I’d love to hear your thoughts so please feel free to comment below.