What will happen after the last bitcoin (BTC) halving takes place?
Precisely every 210,000 mined blocks that are added to the Bitcoin blockchain, the reward for miners is inevitably cut in half.
Initially, in 2009, miners who were able to mine a block received 50 BTC rewards created from scratch, while in November 2012 this reward was halved and reduced to 25 BTC for the first time. In July 2016, was reduced to 12.5 BTC, and in May 2020 it was adjusted to 6.25 BTC.
Eventually, the reward will reset to zero at this rate. Bitcoin is divisible to the hundredth millionth, and this smallest unit of bitcoin is commonly known as Satoshi (Sat).
When the reward is halved to less than 1 Satoshi, it will no longer be issued.
Bitcoin's latest Halving
This will happen much later, perhaps even in 2140, as it takes on average approximately 3 years and 10 months for 210,000 blocks to be mined and the next halving to occur, although it is fair to ask how miners will be able to pay for mining costs. if they no longer receive a reward.
The solution is really very simple: miners, in addition to the reward, already charge feesThat is, the transaction costs that those who want to send BTC must pay to the miners for the transaction to be confirmed, and these fees will continue to be charged by the miners.
For example, right now each block contains between 2,000 and 3,000 transactions, whose total fees are around 0.5 BTC and miners are already charging these fees. However, their total amount per block is much less than the reward.
However, it is worth bearing in mind that mining costs depend on the income of the miners and are not fixed. Thus, going forward, as revenues for miners decrease, costs will also decrease.
In any case, it is already possible to imagine that in approximately a decade or so, most of the miners' income will be fees (tariffs), and the reward will become a smaller portion of the income. In addition, it is also possible that over the years the general rates that miners may charge for each block will increase, so the only problem that could arise is a reduction in miners' income.
If some miners decide to abandon mining due to lack of income, the network is unlikely to be affected. Mining activity will simply become less profitable over time.
A much more significant consequence of the end of the halving’s is the deflation of the bitcoin money supply.
To date, bitcoin's money supply remains inflationary as it increases by approximately 1,800 BTC per day (over 650,000 BTC per year). With the halving of May 2020, it was reduced to 900 BTC per day (approximately 330,000 BTC per year), that is, it will increase by approximately 1.8% per year.
Finally, after the last half, this inflation of bitcoin's money supply will not only stop, but even will return negative, due to BTC stored in public addresses for which private keys will be lost. This is a well-known phenomenon, and is already taking place, that will inevitably decrease bitcoin's money supply after the last halving.
Monetary money inflation below 1.8% is already small, and after the next halving, when it will drop below 0.9%, it will become almost irrelevant: the deflationary effects of BTC could start to be detected long before Last halving because there is not so much difference between an inflation of 0.9% and one of 0.45%.
Consequently, it won't be necessary to wait for the last half to check if bitcoin really has a deflationary nature, because deflationary processes, as a result of BTCs that are inevitably lost every year, will start much earlier.