Recently the 18 millionth bitcoin was mined accounting for about 85.714% of the total available Bitcoins. The cryptocurrency is nearer to its pre-programmed mining cap of 21 million coins. Here we will review what these figures mean for Bitcoin miners and Bitcoin price in General.
Most Bitcoins already Mined
According to data from
CoinMarketCap, more than 85% of Bitcoin has already been mined. This translated to about 18,000,000 bitcoin of the total available 21,000,000 coins. This implies there is 3,000,000 Bitcoin left to be mined. The Bitcoin algorithm is coded to limit the supply of the cryptocurrency to check inflation.
The scarcity of Bitcoin implies that prices of the cryptocurrency can be maintained up or increase with demand. According to basic economics, when demand for a commodity is high it’s priced automatically increases. However, when the supply of the commodity is higher than it’s demand prices will crash. That’s a similar principle governing Bitcoin.
New Bitcoins are etched from the Bitcoin mining Cap of 21 million every time a combination of mining node verifies a block of transaction. The miners who successfully found the block is rewarded with some Bitcoin for their effort in solving the complex algorithm required to find a new block. This is how new Bitcoin comes into circulation.
Effects on Mining Difficulty Factor
According to the originally pre-programed
Bitcoin algorithm, every time 210,000 blocks are found, the mining reward is divided by two. This also is to ensure a stable supply of the cryptocurrency. Satoshi Nakamoto in a 2008 mailing list revealed that the best way to distribute bitcoin is by halving the mining rewards at some point constantly.
Whenever a block of bitcoin is found it becomes harder to find the next block while mining bitcoin. This means bitcoin miners will need to keep on upgrading their mining machines to cope up with the increasing Bitcoin mining difficulty factor. According to BTC.com, the current mining difficulty factor is estimated at 13,565,562,725,123.
This factor is not constant as it keeps on varying depending on the amount of hashing (mining) power the bitcoin network has. Currently, bitcoin miners who find blocks are rewarded with 12.5 Bitcoin. After the next halving, this figure would be reduced to 6.25 Bitcoin for every successful new block added in the network.
How the Global Bitcoin Price could Response
As a rule of thumb, the bitcoin price is supposed to increase as a result of limited supply. However, economically thinking, other factors could limit the increase in price. One of such is regulation of the cryptocurrency that directly affects its demand. The other factor is security which in recent times hampered the demand of Bitcoin across many demographics.
However, some experts believe that 21 million total coins are
insufficient if bitcoin aspires to become a global monetary commodity. Economist believes that deflationary systems are not the best option to control a global monetary commodity. That means at some point the bitcoin community could vote to increase the bitcoin hard cap.
But in the short run, we expect bitcoin prices to significantly improve. Many industry experts predict that bitcoin prices could go up astronomically. According to Jason A. Williams, of Morgan Creek Digital fund, Bitcoin price could hit $55k after the next halving estimated for May 2020.