Will there ever be a day when all Bitcoins are mined?

Many people who are new to the mining industry often ask this question. If only new coins are counted, then Bitcoin will indeed be mined out one day, and this day is not far away. The figure below is the Bitcoin currency supply curve. According to the principle of Bitcoin, after 33 halving periods, the mining output of each block will reach 0.58 satoshis, which is less than the smallest unit of one satoshi. That is, by 2140, 21 million Bitcoins will be produced and will no longer increase. However, after four halvings in 2025, 93.75% of Bitcoins have been mined. Only 6.25% of the total amount can be mined later, which is only 1,312,500 Bitcoins.

However, mining also has another source of income, transaction fees. Since transaction fees currently account for less than 5% of the total mining revenue, many people are worried that the entire mining market will not be able to survive relying solely on transaction fees. This question is equivalent to the following question. When Bitcoin has been halved many times, and the entire mining market is supported only by transaction fees, how much transaction fees should be reached for the entire system to be safe?

Mining is crucial to the security of the Bitcoin system. Currently, the only way to destroy the Bitcoin network is to gain more than 51% of the computing power and launch a 51% attack on the Bitcoin network. If the price of the currency is high, and the cost of deploying mining machines that exceed 51% of the total network computing power is very low, then someone will try to short the price of the currency and deploy a large number of mining machines to make a profit.

To prevent this from happening, the market value of Bitcoin and the total value of mining machines cannot differ too much. Let's first look at what determines the total value of mining machines in the Bitcoin mining market. Generally speaking, when miners feel that the risk-return ratio of mining is balanced, they will no longer deploy new machines, and the total value of mining machines in the entire mining machine market will stop growing. So when will miners stop deploying new machines? Most miners evaluate the payback period before purchasing mining machines. Generally speaking, the maximum payback period that miners can accept is two years, assuming that the operating cost accounts for 50%. Then when the deployment of new machines stops, the total value of all mining machines involved in mining will be equivalent to one year's mining output. If the payback period that miners can accept is longer, then the total value of mining machines involved in mining will be greater than one year's mining output. Therefore, the total value of mining machines involved in mining will not be less than one year's mining output. If a 51% attack is to be launched, the cost of deployment by the attacker will not be less than half a year's mining output.

Assume that the maximum number of bitcoins that the attacker can short is 40% of the total number, that is, 8.4 million bitcoins, and the minimum acceptable profit ratio is 20 times, that is, the maximum acceptable attack cost is 420,000 bitcoins. Then the total value of the mining machines in the entire mining market cannot be less than 840,000 bitcoins. According to the previous model, the total value of the entire mining market is approximately equal to the mining output of one year. If the total value of the mining machines that need to participate in mining is not less than 840,000 bitcoins, the daily mining income must reach 840,000/365=2301.4 bitcoins. Based on 144 blocks per day, the mining income of each block cannot be less than 15.98 bitcoins.

When the continuous halving results in little revenue for new coins and mining revenue mainly depends on handling fees, how many transactions are needed to meet this demand? Assuming that the handling fee for each transfer is 0.0001 coin, the minimum transaction volume required per day is 23.014 million transactions. This transaction volume is not difficult to achieve. Assuming that there are 100 million people participating in the Bitcoin network worldwide, the average number of transfers per person per day is only 0.23 transactions.

If we calculate based on 144 blocks per day, the number of transactions packed in each block is 159,819.4. Based on the data volume of 0.25kb per transaction, the capacity of each block must reach 40M. At this time, the average number of active addresses is twice the number of transactions, reaching 46.028 million. The price of Bitcoin calculated according to the Metcalfe formula will reach 277,500 US dollars (1.748 million RMB), and the cost of each transaction will be 27.8 US dollars. The scale of the entire mining market will be equivalent to 84*27.75=233.1 billion US dollars (146.853 billion RMB). If we calculate based on the average cost of each mining machine of 5,000 yuan, power consumption of 1 kilowatt, and computing power of 10T H/S, the number of mining machines involved in Bitcoin mining will reach 294 million, with a total load of 294 million kilowatts and a total computing power of 2940EH/s, which is 96 times the current total computing power of 30.58EH/s. These mining machines will provide a solid foundation for the security of the entire Bitcoin system.

However, according to the current Bitcoin network design, the maximum capacity of each block is only 1M. This means that to achieve the same system security, the handling fee for each transaction must be increased 40 times to 0.004 coins per transaction. If the coin price is still $277,500, the fee for each transaction will be as high as $1,110.

Therefore, if the main network is not expanded, the number of transactions that can be supported will be relatively limited, which will lead to a limited total market for mining. At this time, when the price of the currency is too high, the security of the system will not be guaranteed. On the other hand, BCH, which has always insisted on expanding the main chain, will solve this problem better. Even if it does not switch to POS, the mining fee alone can support the normal operation of the system every year. In other words, mining will never be finished.