One of, if not, the most important aspects of Bitcoin is its scarcity. An unbreakable mathematical formula ensures that there will never be more than 21,000,000 Bitcoin. Of those 21 million, 19 million and counting have now been mined – that’s over 90% of all Bitcoin that will exist – ever. This significant milestone for Bitcoin displays how scarce sats are going to be in the future. If 90% of all Bitcoin has been mined, it leaves less than 10% remaining for the world to compete over.
When designing Bitcoin, Satoshi Nakamoto, needed to mitigate the rate that Bitcoin would be mined as more miners joined the network. To allow global adoption to occur, Nakamoto ensured that all the Bitcoin would not be mined for around 130 years (2010 – 2140). The ability of Nakamoto to determine how long Bitcoin would take to mine was due to a combination of both the difficulty adjustment and the halvings epochs.
Difficulty Adjustment
The difficulty adjustment addresses the issue of how to ensure blocks will run close to 10 minutes even when hashpower joins or leaves the network. One would assume that as the hashpower increases, the blocktime will decrease – which is correct. However, the difficulty adjustment, which occurs every 2016 blocks (approx. two weeks) combats the change in hashpower by either making the complex maths algorithm (what miners’ computing power is attempting to solve) more difficult or less difficult to solve. Essentially, bringing the blocktime back to the standard 10 minutes that Nakamoto programmed. This is why, no matter the hashrate, Bitcoin cannot be mined any faster or slower than intended.
Bitcoin Halving
Halving is an event which halves the issuance rate of Bitcoin every 210,000 blocks (which is approximately every four years). This halving schedule is precisely defined by an algorithm in Bitcoin’s code, which allows a certain amount of new Bitcoin to be mined in each block.
Bitcoin miners are rewarded a certain amount of Bitcoin every time a new block is produced. During the first four years (or 210,000 blocks), the Bitcoin Block Reward was 50 Bitcoin. It then halved to 25, then 12.5 four years after, and in May 2020, we entered the 4th epoch where the block reward dropped to 6.25 BTC. This process will keep occurring until the reward block gets to zero, which will happen sometime in the year 2140.
Bitcoin halvings are the reason why it took:
- Approximately 8 months to go from 10% mined to 20% mined.
- Approximately 17 months (1.42 years) to go from 50% mined to 60% mined.
- Approximately 27 months (2.25 years) to go from 70% mined to 80% mined.
- Approximately 47 months (3.92 years) to go from 80% mined to 90% mined.
And why it will take:
- Roughly 47 months (3.92 years) to go from 90% mined to 95% mined.
- Roughly 1420 months (118.33 years) to go from 95% mined to 100% mined.
If you think you may have missed the boat on Bitcoin, these figures above highlight why that is simply not true. If anything, you’re early.
According to recent estimates, less than 2% of the global population holds Bitcoin:
Imagine the remaining 98% of the population fighting over the last 10% of the supply!
Stacking more sats today is remarkably easier than it will be to stack sats in the future – even in just five years.
A significant reduction in supply combined with a steady increase in demand will lead to a significant price increase in USD terms. The level of supply shock coming to Bitcoin will be a phenomenon no asset has ever experienced. Why? Because no other asset is as truly scarce as Bitcoin.
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