Bitcoin mining fees will disappear when the supply of bitcoin reaches 21 million. This is because the Bitcoin network is programmed to only produce a maximum of 21 million coins. Data analytics firm Chainalysis estimates that approximately one-fifth of all coins mined to date are lost, meaning that far fewer than 21 million will be actively circulating. This means that miners will no longer be able to earn block rewards and will instead have to rely on transaction fees as their main source of income.
The Bitcoin halving is an event that occurs approximately every four years, when the bitcoin reward miners earn for finding a new block is halved. This event has a deflationary effect on the cryptocurrency, which could have a negative impact on certain industries that sell frivolous goods in the short term. However, industries such as the tech sector would likely thrive due to the deflationary pressure. Currently, 18,737,550 bitcoins are in circulation, leaving only 10 percent of the pre-programmed fixed supply left to mine.
Major investors have only begun to take a serious look at the asset class, suggesting there is plenty of room for growth. Bitcoin miners will be able to continue earning block rewards until a total of 21 million BTC has been minted, after which no new Bitcoin will enter circulation. If over a four-year period, a miner can reduce his energy costs, he can endure a loss of revenue without being forced to close. However, it is uncertain whether transaction fees alone will be enough for miners to provide them with sufficient resources.
Reaching this supply limit is likely to have the biggest impact on Bitcoin miners, but Bitcoin investors may also experience negative impacts. Cryptocurrency miners are nothing but resilient, but in few other industries one would have to get up and move around the country just to keep the lights on. On the other hand, Skrill crypto chief Jordan Stoev believes that the Bitcoin blockchain is likely to be reserved for significant value transfers, and that alternative layer 2 or blockchain solutions will be used for most transfers. If Bitcoin in 2140 serves largely as a store of value, rather than for daily purchases, miners can still make a profit even with low transaction volumes and the disappearance of block rewards.
