In the world driven by Fiat currencies, Bitcoin is the pioneering force that brought the concept of decentralized finance to the forefront. With its fixed supply cap of 21 million coins, Bitcoin introduced the world to digital scarcity. But as we inch closer to this cap, a pressing question emerges: What happens when all these coins are mined? This article delves deep into the implications of this eventuality, not just within the crypto realm but also in the broader macroeconomic landscape.
The Essence of Bitcoin Mining:
Bitcoin mining is the backbone of the Bitcoin network. Miners validate and record transactions on the blockchain, ensuring the network’s security and integrity. As a reward, they receive bitcoins. This reward, however, isn’t constant.
Matthew Crowder from Trader University explains that the reward consists of the block subsidy and transaction fees. The block subsidy started at 50 BTC and undergoes a “halving” approximately every four years. As of now, it stands at 6.25 BTC. This predictable reduction ensures that Bitcoin remains scarce and valuable.
The Phenomenon of Halving:
Approximately every four years (or technically, every 210,000 blocks), the reward given to Bitcoin miners for processing transactions is cut in half. This process is known as “Bitcoin Halving.” It’s a deliberate mechanism coded into the Bitcoin protocol to control inflation.
The immediate effect of halving is that miners receive 50% fewer Bitcoins for verifying transactions. This can impact their profitability, especially if the price of Bitcoin doesn’t increase proportionally. Over time, as the reward decreases, the transaction fees become a more significant portion of miners’ income.
Historically, halvings have led to significant price surges. The reduced supply of new Bitcoins entering the market, combined with steady or increasing demand, often leads to upward price pressure. However, other macroeconomic factors can also influence the price, so while halvings are significant, they’re not the sole determinant of Bitcoin’s price.
The Future: All Bitcoins Mined
Once all 21 million Bitcoins are mined, the network will no longer provide Bitcoin rewards for mining. However, since transactions will continue, miners can still earn fees. The Bitcoin protocol may also undergo changes or updates that could introduce new dynamics to the mining process.
Historically, each Bitcoin halving has been accompanied by significant price surges. While predicting the exact price is challenging due to various external factors, many analysts believe that the scarcity induced by halvings could drive Bitcoin’s price upwards.
By the time of the last halving, which is expected to occur in 2140, Bitcoin might have reached unprecedented value, potentially solidifying its position as a global reserve asset.
Coinpedia’s Bitcoin price prediction analysis suggests that by 2030, Bitcoin’s price could range between $277,751 to $347,783. The next significant milestone for Bitcoin is the fourth halving, expected in March 2024.
This event will reduce the miner’s block reward to 3.125 BTC per new block. Historical trends suggest that Bitcoin’s price might create a new high post this halving, potentially reaching up to $74,967.
Yet, history has shown that with challenges come innovations. The Bitcoin community, miners, and stakeholders worldwide will undoubtedly navigate these complexities, ensuring that Bitcoin’s legacy as a revolutionary financial instrument endures. The road ahead is uncertain, but the resilience and adaptability of the Bitcoin ecosystem give us reason for optimism.
2. Clean Energy Bitcoin Mining Threshold Puts Elon Musk and Tesla in Focus
Bitcoin Mining and Clean Energy: Bloomberg Intelligence reported Bitcoin miners now meet the 50% clean energy threshold. Jamie Coutts shared the latest on X (formerly Twitter), saying, “The Bitcoin energy narrative is flipping! A new note out this morning on the Bloomberg Terminal looks at the rapid rise of sustainable energy sources in BTC mining.” In 2021, Elon Musk announced that Tesla (TLSA) would resume accepting BTC when miners reach the 50% clean energy threshold.
Genesis Ceases Crypto Trading Services: On Thursday, news hit the wires of Genesis halting crypto trading services permanently. Genesis previously announced the end of spot trading by September 30. Derivatives trading services will cease immediately.
SEC v Stoner Cats 2 Draws Condemnation: Stoner Cats 2 LLC became the latest victim of the SEC onslaught on the US digital asset space. The SEC announced charges against Stoner Cats 2 LLC for conducting an unregistered offering of crypto asset securities in the form of NFTs that raised $8 million to fund Stoner Cats, an animated web series. Ripple CLO Stuart Alderoty called out the SEC move. SEC Commissioners Hester Peirce and Mark Uyeda dissented.
Deutsche Bank Enters the Crypto Space in Earnest: German banking giant Deutsche Bank (DB) and Taurus SA announced a partnership to offer crypto and tokenized asset custody services to institutional clients. Deutsche Bank Global Head of Securities Services Paul Maley reportedly said, “As the digital asset space is expected to encompass trillions of dollars of assets, it’s bound to be seen as one of the priorities for investors and corporations alike.”
The Cambridge Bitcoin Electricity Consumption Index, one of the key resources in this area, has had its first major revision since its launch in 2019, leading to a reduction, albeit relatively small, in consumption.
For example, for 2021 where the largest discrepancy occurs, the earlier estimate of 104TWh is revised downward by 15TWh to 89TWh.
For 2023 the estimated anticipated consumption based on the year-to-mid-August is 70.4TWh, rather than 75.7TWh of the earlier model.
The Cambridge team attribute the change to the modelling of the Bitcoin mining hardware and technology, taking into account both the increased efficiency and power of the evolving application-specific integrated circuits (ASICs).
With the progressive reduction in chip size, there has been a corresponding reduction in power needed to transmit data.
However, this now appears to have slowed and steadied as the advances have approached the physical limits of semiconductor technology, with smaller chip manufacture becoming more challenging and expensive.
The Cambridge team expresses confidence in their estimates and regards each update as a progressive step toward enhancing their reliability, but the team acknowledges that Bitcoin’s actual electricity consumption remains elusive and can only be approximated.
Moreover, while electricity consumption is a crucial element in determining Bitcoin’s environmental footprint, it is one and the energy sources used in mining are just as important. Further research is planned to focus on developing a more nuanced perspective of Bitcoin’s electricity mix and more closely examining the climate risks and opportunities associated with cryptocurrency mining.
Samsung to add generative AI to home appliances
Samsung has been reported as planning to add a generative AI feature to its home appliances in the next year.
Yoo Mi-young, head of the software development team of Samsung’s digital appliances division, was reported speaking at the IFA consumer electronics show in Berlin: “Generative AI technologies will be applied to voice, vision and display” to enable the household electronic products to have a better understanding of what consumers do and want and to be able to respond accordingly.
It will enable the gadgets to communicate with users in a more conversational manner, and to better respond to their questions based on past exchanges and in context.
They will also be able to provide recipes and dietary suggestions based on for example the food ingredients stored in the refrigerator.
Yoo Mi-young was also quoted as reporting the development of an energy-efficient chip to process the increasing amounts of data of smart appliances, with features such as generative AI.
Hydrogen-powered van doubles the range of EV counterparts
Canadian hydrogen company First Hydrogen has reported that its hydrogen fuel cell powered light van supplied to GB fleet management provider Rivus has achieved an “unbeatable range”, easily more than doubling the upwards range to 240km of other modern light commercial electric vehicles.
The vehicle was trialed with Rivus for just over 4 weeks, and covered over 1,100km in that time. Tests were completed on diverse routes, providing data on how the vehicle operates under different conditions including urban city centre driving and extra urban routes covering both low-speed city centre roads and motorways.
The tests also covered the van both empty and loaded to 90% of its maximum weight capacity, reflecting the way vans will be used in the real world.
The vehicle was found to be not heavily affected by the speed or the payload, and performed well under the different load cycles compared to the electric counterparts, which can experience reductions in range by approximately 10%.
“The main benefit of the vehicle is the refuelling times are quicker than battery electric vehicles charge times. And of course, unlike internal combustion engines, hydrogen vehicles produce zero emissions,” Gemma Horne, Warranty Controller at Rivus, commented.