Will Bitcoin Be Sustainable Going Into The Future?

With Bitcoin mining using as much power as entire countries and the cryptocurrency being used to fund fraud and other not-so-legal activities among many other challenges, the question of whether it will eventually replace traditional finance systems despite these quarks is a constant one for both the naysayers and enthusiasts of the cryptocurrency.

Bitcoin's original source code stipulates that there can ever be 21 million coins that can be mined.  Since its inception in 2009, over 18 million Bitcoins have been mined, leaving less than 3 million to still be mined. When one gets to understand how Bitcoin mining works and what will happen when all the Bitcoins have been mined, the question of Bitcoin's sustainability going forward becomes a little less opaque but not entirely clear neither.

How Bitcoin mining works is that for every successful verification of a block, the process which uses up huge computer processing power to solve complex mathematical problems which enable Bitcoin transactions, the Bitcoin mining process rewards miners with a chunk of Bitcoin as well as some transaction fees paid by transacting parties. The catch however is that every four years, this Bitcoin reward to miners is halved.

When Bitcoin started in 2009, the reward for every successful verification of a block was 50 Bitcoins. Four years later in 2012, the reward was halved to 25 Bitcoins. Another four years later, in 2016, it was halved to 12.5 Bitcoins for every successful verification of a block. 2020 it was halved again to 6.25 Bitcoins. This might seem undesirable especially for people who join Bitcoin mining late but it is this principle that keeps Bitcoin's inflation rate half less than it was four years prior.

It is also this principle that will ensure that Bitcoin's supply will not deplete until at least the year 2140, more than a hundred years from now. At this point, the naysayers may come in and point out how precisely this depleting supply will just lead to more energy-intensive mining which will eventually cripple power grids should demand for the cryptocurrency continue to surge. True as that may be, another point of view, this time from Bitcoin enthusiasts, is that traditional financial systems like commercial and central bank servers, which can be replaced by Bitcoin. also use up immense amounts of energy.

Another important factor to consider is that as the reward for Bitcoin mining continues to halve every four years, the mining process might be seen as less lucrative by miners who will then shift their focus to just earning transaction fees for verified transactions which will reduce the energy load caused by the mining process. The decreasing supply of Bitcoin will also make the transaction verification business quite a lucrative one because as the Bitcoin the price likely increases in response to low supply and high demand, so will the transaction fees charged. Of course, the demand for Bitcoin will depend on how widely adopted it becomes in the mainstream as the years go by.

Because of Bitcoin's community decision-making process, it is important to note that the cryptocurrency's 21 million Bitcoins limit can change in the future, leading to either an increase or decrease in the number of bitcoins to be mined. Changes to Bitcoin's core protocol to effect this supply change as well as any other changes to the cryptocurrency can be invoked by anyone in the Bitcoin community using the Bitcoin Improvement Proposal then voted for and adopted if they achieve a 95% vote.

Taking all discussed factors into consideration, a conclusion that can be drawn about the issue of Bitcoin's sustainability going into the future seems to point to the mainstream adoption factor. Mainstream adoption will significantly increase demand which could push and pressure governments to subsidize sustainable sources of energy for miners going into the future. Mainstream adoption itself would also depend on a wide array of factors including public perception of fiat currencies versus Bitcoin, ease of access to means of trading Bitcoin especially in developing countries, the Bitcoin energy use factor, government interference on Bitcoin mining, and trading, etc.