The Future of Bitcoin Mining Rewards: Challenges and Opportunities After 2140

By around 2140, there will be no new Bitcoin issued in the market. Once all 21 million Bitcoins are distributed, 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.

Main Points

• After the year 2140, block subsidies will disappear. Miners will rely solely on transaction fees paid by users to maintain network security.
• The gradual reduction of mining rewards has raised doubts about the long-term security of Bitcoin.
• A reduction in security budget may increase the risk of a 51% attack or lead to network centralization.
• Optimists believe that the increase in Bitcoin value and future demand for blocks will make the pure transaction fee market economically viable for mining tools.

The scarcity of Bitcoin is one of its most famous characteristics. To ensure scarcity, the miner rewards are gradually reduced every four years through the "halving" mechanism. However, this mechanism also brings long-term challenges.

By around 2140, new Bitcoin rewards (block subsidies) will completely disappear. Block subsidies are essentially Bitcoin's security budget, used to incentivize miners to secure the network. This raises a critical question:

Is it enough to rely solely on transaction fees to maintain network security?

Understanding the Incentive Model of Bitcoin

To analyze the challenges of the post-subsidy era, it is necessary to understand the incentive mechanism that currently maintains the Bitcoin network. Every ten minutes, a miner validates a new transaction block and receives rewards, which include two parts:

• Block subsidy: The preset number of newly generated Bitcoins. When Bitcoin was first launched, it was 50 Bitcoins per block, halving every four years. This is the main source of income for miners.
• Transaction Fee: The additional fee paid by users during transactions to incentivize miners to include the transaction in a block. It can be seen as a "tip" for miners, helping the transaction to be completed more quickly. The current average transaction fee is approximately $1.30.

Bitcoin Halving: Reducing the Issuance Rate

Each halving is a cyclical efficiency test for the Mining industry, as miner income is effectively halved. This ensures that only the most efficient miners can profit, but it may lead to a temporary decrease in network hash rate.

The decline in network computing power means that the Bitcoin network is more vulnerable to threats such as a 51% attack.

Bitcoin block rewards in 2025

To illustrate the importance of block subsidies to miners, the following is the expected rewards detail for mining a block in July 2025:

• Fixed rewards (newly generated Bitcoin): 3.125 coins
• Additional "tip" (transaction fee): about 0.025 coins
• Total rewards per block: approximately 3.15 Bitcoins

Transaction fees account for a very small proportion of miners' total income, which means that a pure transaction fee market may struggle to support miners' profitability.

Discussion on the Feasibility of Bitcoin Economy in the Post-Subsidy Era

The current level of transaction fees is insufficient to ensure network security. However, optimists believe that by 2140, demand will drive up transaction fees, while pessimists foresee a crisis.

Pessimistic Argument: Reduction of Security Budget

Pessimistic views suggest that the historical trend of transaction fees does not show enough to offset the increase due to the reduction of subsidies. Each halving cuts the security budget, gradually reducing network security.

Optimistic Argument: Strong Fee Market

Optimists believe that the appreciation potential of Bitcoin and the future growth in blockchain demand will support the network. They expect:

1. Bitcoin will become a trillion-dollar asset, and even a small percentage of transaction fees can provide substantial income for miners.
2. The demand for block space will significantly increase, possibly coming from institutional settlements, layer two scaling solutions, or emerging innovations.

These factors may drive up transaction fees, making the future pure fee market economically viable.

Potential Risks of Reduced Security Budget

A decline in the security budget may lead to a large number of miners shutting down, reducing the total network hash rate and triggering a series of risks:

51% attack

Entities controlling more than half of the network's computing power may reverse transactions or censor the network. The security budget is the main line of defense; the higher the budget, the higher the cost of an attack. Although the current cost of an attack is extremely high, this threat may increase in the long run as the security budget decreases.

Hashrate fluctuations

A more direct risk is that miners exit in large numbers due to declining rewards, leading to a sharp decrease in hash rate. Although difficulty adjustment will correct this issue, a rapid withdrawal of miners may cause a short-term vulnerable period.

Bitcoin Innovation as a Solution

The Bitcoin community is developing solutions to promote network adoption and mitigate the risks brought about by a reduction in the security budget:

Layer 2 solutions

Layer 2 solutions like the Lightning Network can improve transaction speed and reduce costs. There has been some application in places like Vietnam. If successful, it will drive Bitcoin from specialized applications to everyday use, increasing main chain transaction fees.

Bitcoin Rune

Rune is a token standard that allows for the creation of community tokens on the Bitcoin blockchain. It once pushed the average transaction fee up to 127 dollars. Although the hype has cooled, it demonstrated the potential for new use cases to drive up transaction fees.

Future User Experience

For ordinary users, interaction with Bitcoin can be multi-layered. Direct transactions on the main chain can be expensive, used only for large transfers. Daily transactions may be conducted through second-layer solutions, providing an instant low-cost experience.

Investor's Long-Term Outlook

Investors need to weigh the scarcity and security of Bitcoin. Cybersecurity will depend on the future fee market. The long-term value of Bitcoin stems not only from its technological features but also from the market's confidence in its security capabilities.

Conclusion

The birth of the last Bitcoin is not an end, but the beginning of the ultimate test. The end of block subsidies is the expected final state of the protocol, and the ecosystem has more than a century to adapt. The long-term security of Bitcoin will be determined by technological innovation, the evolution of the transaction fee market, and social consensus.

It should be noted that this article discusses potential issues concerning the distant future of Bitcoin, which are highly speculative.