In early December 2024, Bitcoin (BTC) hit an extraordinary milestone, surpassing $100,000 for the first time. As the largest and most valuable cryptocurrency, Bitcoin continues to dominate the market, with its limited supply playing a key role in its soaring value.

The Bitcoin blockchain protocol caps its total supply at 21 million BTC. Around 19.9 million Bitcoins have been minted, leaving approximately 1.1 million BTC yet to be mined. However, this process is far from over. Projections suggested that the last Bitcoin will not be minted until 2140 due to built-in network protocols.

Bitcoins Mining

Bitcoin operates on a proof-of-work system, rewarding miners for validating transactions. Miners add transaction blocks to the blockchain, each containing 1,400 to 2,300 transactions. Currently, miners earn 3.125 BTC per block, and an average of 144 blocks are mined daily, with a new block added approximately every 10 minutes.

Miners receive transaction fees along with block rewards. These fees depend on the complexity of the transactions, incentivizing miners to prioritize those with higher fees. Miners play a critical role in ensuring the security of Bitcoin’s decentralized network.

Understanding Bitcoin Halving

To delay reaching the 21 million BTC cap, Bitcoin’s code includes a “halving” mechanism.  Half of the reward is mined every four years from every 210,00o blocks mined. This reduces the number of new Bitcoins entering circulation.

Bitcoin’s initial block reward in 2009 was 50 BTC. After the most recent halving in April 2024, the reward dropped to 3.125 BTC. The next halving, slated for 2028, will reduce rewards to 1.5625 BTC. This system creates scarcity, potentially driving up Bitcoin’s value as demand remains steady.

What Happens After the Cap?

When Bitcoin’s supply limit is reached, miners will no longer earn block rewards. They will rely solely on transaction fees, raising concerns about the network’s security and miners’ continued participation.

Discussions within the Bitcoin community about altering the supply cap or halving schedule could lead to a hard fork, creating a separate blockchain. For now, these are future concerns. Investors today can focus on Bitcoin’s scarcity-driven growth, while the cryptocurrency’s long-term sustainability remains a challenge for future generations.