Future Outlook After the Disappearance of Bitcoin Mining Rewards

By around 2140, the Bitcoin network will face a significant turning point. At that time, all 21 million Bitcoins will have been mined, and no new Bitcoins will be created. This means that Bitcoin miners will only be able to earn rewards through transaction fees. This change has raised concerns about the long-term security of the Bitcoin network.

Key Issues

• After the year 2140, block subsidies will no longer exist. Miners will only rely on transaction fees paid by users to maintain network operation.
• The gradual reduction of Mining rewards raises questions about the long-term security of Bitcoin, as these rewards are essentially the network's "security budget".
• A reduction in the security budget may increase the risk of the network suffering a 51% attack or lead to a higher degree of centralization.
• Optimists believe that the increase in Bitcoin's value and the future demand for blocks will keep the model relying solely on transaction fees economically viable for miners.

The scarcity of Bitcoin is its most famous characteristic and is also the reason it is referred to as "digital gold." To ensure scarcity, the rewards that miners receive are gradually reduced every four years through the "Bitcoin halving" mechanism. However, this mechanism also brings long-term challenges.

The main incentive for miners in the Bitcoin network—the rewards from newly generated Bitcoins (i.e., block subsidies)—will completely disappear around the year 2140. Block subsidies are essentially the security budget of Bitcoin, used to incentivize miners to protect network security. This raises a critical question: Are transaction fees sufficient to maintain network security?

Bitcoin Incentive Model Analysis

To understand the challenges of the post-subsidy era, it is necessary to understand the current incentive mechanism that sustains the Bitcoin network. Every ten minutes, a miner validates a new transaction block and receives a block reward composed of two parts:

• Block subsidy: The pre-determined number of newly generated Bitcoins. When Bitcoin was first launched, it was 50 coins per block, halving every four years. This mechanism will distribute a total of 21 million Bitcoins over several decades and is currently the primary source of miners' income.
• Transaction Fee: The fee included by users in transactions, incentivizing miners to include the transaction in a block. It can be seen as a "tip" from users to miners, helping to ensure the smooth completion of the transaction. The current average transaction fee for Bitcoin is about $1.30 per transaction.

Bitcoin Halving: Decrease in Issuance Rate

Each Bitcoin halving is an efficiency test for the mining industry, as it effectively halves the income of miners. This ensures that only the most efficient miners can profit, while less efficient miners may drop out, potentially leading to a temporary decrease in network hash rate.

The decline in network hash rate means that the Bitcoin network is more susceptible to attacks, such as a 51% attack (where a single entity controls enough hash rate to disrupt the blockchain).

2025 Bitcoin block reward prediction

To illustrate the importance of block subsidies for miners, here is the expected rewards for successfully mining a Bitcoin block in July 2025:

• Block subsidy (newly generated Bitcoin): 3.125 coins
• Transaction fee (user "tip"): about 0.025 coin

Total rewards per block: approximately 3.15 Bitcoins.

It can be seen that transaction fees account for only a small portion of the total income of miners, which indicates that it is almost impossible for miners to profit in a market that relies solely on transaction fees.

Discussion on the Feasibility of Bitcoin Economy in the Era After Subsidies

The current level of transaction fees is clearly insufficient to maintain network security. However, optimists believe that by 2140, demand will drive transaction fees to far exceed current levels, while pessimists foresee potential crises.

Pessimistic view: Security budget cuts

The argument of pessimists is straightforward: historical trends do not show that transaction fees will rise enough to compensate for the reduction in subsidies. They worry that each halving will cut the security budget, gradually reducing network security.

Optimistic View: Strong Fee Market

Optimists believe that Bitcoin will be supported by its continuously rising asset value and the ongoing growth in block demand. They anticipate:

1. With the help of Bitcoin's deflationary design, the network will evolve into an asset class worth trillions of dollars, even a small percentage of fees in the future can generate significant income for miners.

2. The demand for block space will significantly increase, potentially emerging in the form of large institutional settlements, layer two scaling solutions, or new innovative forms. These factors will drive up transaction fees, making them economically viable in the future.

Potential Risks of Reduced Security Budget

A decrease in the security budget may lead to a large number of miners exiting, reducing the total network hash rate, thereby triggering a series of potential risks:

51% attack

The most concerning threat is the 51% attack, where an entity controlling more than half of the network's computing power can reverse transactions or censor the network. The higher the security budget, the more computing power is supported, and the higher the cost of an attack. Currently, launching such an attack is costly, as it could lead to a sharp drop in Bitcoin prices, reducing the value of the attacker's hardware. However, as the security budget decreases, the cost of an attack lowers, increasing the likelihood of this threat in the long term.

Hashrate fluctuation

A more immediate risk is miner capitulation, where a significant drop in earnings due to Bitcoin halving forces a large number of miners to shut down their mining rigs, leading to a sharp decline in hash rate. Although difficulty adjustments will correct this, the rapid exit of miners may create network vulnerability in the short term.

Bitcoin Innovation as a Solution

The Bitcoin community is actively developing solutions to promote network adoption and mitigate the risks posed by the gradual reduction in security budgets:

Layer 2 solution

Layer 2 solutions like the Lightning Network enable Bitcoin to be used for everyday transactions. In Vietnam, the Bitcoin community has collaborated with local merchants to promote the use of Bitcoin payments supported by the Lightning Network. If these solutions succeed, they will drive Bitcoin from professional applications to everyday use, increasing the transaction fees on the main chain.

Bitcoin符文

Rune is a token standard that utilizes the Bitcoin UTXO model and OP_RETURN opcode, enabling the creation of community tokens on the Bitcoin blockchain. Although market interest in Rune has waned, this innovation demonstrates that new use cases could drive up transaction fees, paving the way for a Bitcoin economy sustained solely by transaction fees in the future.

Future User Experience Forecast

For ordinary users, interacting with Bitcoin may be a multi-layered experience. Sending transactions directly on the main chain can become expensive, especially for large transfers. Everyday transactions are likely to occur through second-layer solutions like the Lightning Network, providing instant and low-cost experiences. This means that the user experience for small payments will still be feasible but will be realized at different technological levels.

Investor's Long-Term Outlook

For investors, the end of block subsidies has triggered a critical conflict between the scarcity and security of Bitcoin. Investors are attracted to Bitcoin's fixed supply, but now must face the reality that network security will depend on the future fee market. If the network supporting this scarce asset is perceived to have vulnerabilities, its long-term value comes into question. Ultimately, the value of Bitcoin derives not only from its technical characteristics but also from the collective confidence of the market in its ability to remain secure.

Conclusion

The day the last new Bitcoin is mined does not signify the end of Bitcoin, but rather the beginning of its ultimate test. The end of block subsidies is the final state anticipated by the protocol, and the ecosystem has over a century to adapt to this challenge. The long-term security of Bitcoin will be determined by technological innovation, the economic evolution of the fee market, and the social consensus surrounding Bitcoin as the global settlement layer.

It should be noted that this article discusses potential issues that may arise in the distant future of Bitcoin, given that there is a long time interval of nearly a century from now until 2140, the content is highly speculative.