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What is the incentive for continuing to mine bitcoin as we get very close to the 21 million cap?

April 28, 2021 (updated April 28, 2021)

The Investopedia article on Bitcoin explains the Bitcoin issuance schedule and how it’s halved every four years. Currently, roughly 18.5 million have been mined, with the total cap being 21 million. It’s assumed that the last Bitcoin will be mined in the year 2140, which is obviously quite a ways off.

Given both the monetary and energy cost of mining Bitcoin (the two are related since it requires a large amount of computing power), isn’t there a diminishing incentive to continue mining Bitcoin as we approach the hard-cap limit of 21 million bitcoins? In other words, as the supply of Bitcoin nears its cap, and the reward for verifying transactions is halved, what will incentivize individuals to continue mining Bitcoin if their odds of verifying a transaction before anyone else decreases? And on the off chance that they do it first, the reward will be miniscule. Investopedia touches on this:

In actuality, as the year 2140 approaches, miners will likely spend years receiving rewards that are actually just tiny portions of the final bitcoin to be mined. The dramatic decrease in reward size may mean that the mining process will shift entirely well before the 2140 deadline.

Follow-up question: Couldn’t this lead to a monopoly situation where fringe miners give up entirely and only the biggest mining networks reap the profits of continuing to mine Bitcoin?



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