Will Bitcoin miners still be mining in 2140?

Author: AA Master

Chinese translation: Cobo Wallet

Netizen Dumb Janos asked: "What will happen when the block height on the Bitcoin network reaches 6,930,000 in 2140? Will we still be able to transfer Bitcoin at that time? Why?"

This topic is very common and many people have asked similar questions.

Netizen George asked: "If there is no block reward, how to motivate miners?"

Dimitris believes: “Miners will also earn transaction fees by verifying transactions. According to the volume of Bitcoin transactions and the degree of adoption at that time, the transaction fees will be sufficient (to motivate miners).”

We will face this situation in the future. When the block reward changes from 1 Satoshi to 0 Satoshi, no new Bitcoin will be generated as a block reward. What you need to know now is whether miners will continue to mine. This is a question that every mine and every miner asks every day, but the efficiency of mining equipment is different, and everyone considers it differently.

Miners have to consider many variables when weighing this issue. When the block height on the Bitcoin network reaches 6,930,000, nothing special will happen suddenly; nor will anything special happen in the ten blocks, one hundred blocks, or one thousand blocks before that.

It's a bit like when you turn 18, a lot of things change after 12:00, and you suddenly become an adult legally. But does that mean that you at 11:59 are two different people than you were at 12:01? Do you start behaving like a mature adult after 12:00?

For most people, it's a gradual process. There's not one magical moment where something happens.

Bitcoin mining is a very complex dynamic economy that depends on many variables. All variables interact and influence each other. In order for each miner with an ASIC mining rig to be profitable, decisions must be made every day based on their current profitability and expected profitability in the coming days/weeks/months.

Factors they consider today when deciding whether to continue running equipment include: The efficiency of the ASIC hardware - each device may be different. Imagine a warehouse with a thousand ASIC mining machines, some of which are the latest and most efficient systems, but some of them may be older generations, or several generations older. Therefore, if the most efficient mining machines are profitable and the inefficient mining machines are not profitable, miners may choose to shut down the least efficient mining machines. But in many cases, because they have pre-purchased electricity, they may decide to continue operating at a loss.

Every day, thousands of miners make decisions among millions of mining hardware devices, making decisions about how to operate profitably under certain conditions. There are many factors to consider when making this decision, one of which is the block reward - how many bitcoins are rewarded for each block mined, which is halved every four years. Miners know in advance that profitability will change in the spring of 2020 because the block subsidy will be halved, and they also know that the market will react to these changes, affecting the price of Bitcoin. The profits (from rising prices) may offset the losses from the reduction in block rewards. They make decisions months in advance to buy better and more efficient mining hardware, negotiate cheaper electricity prices, and may also hedge on exchanges and open Bitcoin markets to adjust to possible risks in the future. They can use futures to hedge some of the risks. Miners pay for electricity in fiat currency and receive block rewards in Bitcoin, so the exchange rate between Bitcoin and fiat currency is really important to their profitability.

Electricity costs, equipment efficiency, operational efficiency, and forecasts and expectations of future prices all come into play every day.

Help miners determine which equipment is still effective, which equipment needs to be upgraded quickly, or even change some operational strategies. These decisions are made every day.

Nothing magical will happen when the block is 6,930,000. The halving is not a sudden event. Miners can foresee it and plan and prepare for it from the first day of operation.

Looking back at previous halving events, despite media fearmongering that Bitcoin would cease to function, in reality, nothing major happened on the halving day, although there were significant market changes in the following months or years.

Remember, one of the most important factors is mining difficulty.

Let’s take a look:

What if some miners find it unprofitable?

They will shut down some of the least efficient rigs; or perhaps all of them due to high electricity prices. Not all miners have the same profitability, and those with the least efficient rigs and the highest electricity costs will not be profitable. These miners will shut down their equipment, and the ones who remain are the miners with efficient rigs and low electricity costs, and they will not shut down their rigs. As some rigs shut down, the hashrate will drop. In two weeks at most, the difficulty of mining will readjust. Since there are fewer miners competing, the difficulty of mining will drop. This means that miners who were previously making little profit but continued to mine will now make more money because the hashing difficulty has dropped. They will get a larger share of the mining revenue. In the short term, blocks will be mined more slowly. For example, if the hashrate drops by 50%, it means that half of the miners have turned off their rigs, which is of course unlikely.

The result of this is that the block time will increase to one every 20 minutes instead of one every 10 minutes, but this will only last for a week to a week and a half, then the difficulty will readjust to one block every 10 minutes, and the miners who continue to mine will become more profitable. Because the difficulty has been cut in half, they can mine twice as many blocks, so those who stick with it for a long time will be very profitable. You may also have realized that miners who are barely profitable may decide to stick with it, because after all, the difficulty will readjust, some less efficient competitors will drop out, and the market will gradually shift to eliminate the less efficient players and recalibrate the difficulty, so miners are always barely profitable. If this means that mining is less profitable, then there is no way, mining is less profitable.

This has happened many times throughout Bitcoin's history. If Bitcoin had only one-tenth of the hashrate today, it would still run securely without any problems. How do I know? A year and a half ago, the mining hashrate was one-tenth of what it is today, and the Bitcoin network was very secure. So even if the block reward is gone, nothing will really change. The halving comes, nothing will happen, a bunch of miners shut down, nothing will happen except a slight delay in the block time. Then in less than two weeks, the difficulty is readjusted. It's a dynamic system that is constantly adapting to changes.