Bitcoin’s final block reward

I’ve previously looked at block timing against the target 10-minute time and we have seen that since 2010 the Bitcoin network, despite the difficulty retargeting every two weeks, has consistently beaten, on average, the target time.

With that in mind, when will the final block reward be granted? It is often cited that this will be 2140, but could the current trajectory bring this significantly sooner?

The Bitcoin network halves the miner’s reward every 210000 blocks, which should equate to 4 years. The block reward for the first 210000 blocks was 50 BTC, or 5000000000 Satoshis. This halves every 4 years until block 6,720,000 when the reward will be 1 Satoshi for each of the next 210000 blocks. At the next halving, the value falls below 1 Satoshi which is the minimum representable amount within Bitcoin and therefore no block rewards will be offered; miners will be rewarded transaction fees only.

The table below summarises the block rewards:

If the block time was a consistent 10-minutes from the genesis block (3^rd January 2009 at 18:15:05) onward, block 6930000 would be expected on 8^th October 2040.

Based on the average (mean) block time from the genesis block to block 762150, block 6930000 would be expected on 1^st December 2137, just over three years ahead of the expected date.

Is this realistic? I would not expect so.

The first 10 years of Bitcoin’s existence saw huge gains in hashing power from general purpose processors (CPUs) to more specialist graphics processing units (GPUs) to specific hardware being designed with the sole purpose of hashing (Application Specific Integrated Circuits; ASICs). It has also seen a large increase in the number of individuals and companies investing resources into mining bitcoin, although less so in recent years due to the difficulty targets and the cost of hardware and electricity.

This growth has resulted in similarly huge variations of the difficulty target but with only two week of granularity, the protocol is relatively slow to change to accommodate the increased hashing power.

I would expect that in time, the advances and investment into increasing hash rates will decrease, especially in later years where the block reward is very small. However, this depends on the value of bitcoin and the transaction fee values rewarded to the miner. This stabilisation of hashing power will allow the Bitcoin protocol’s difficulty retargeting to be more effective and I would expect it will drift closer to the 10-minute mark over time. It does not negate, however, that we are ahead at this point, as the retargeting only takes into account the previous 2016 blocks and not all previously existing blocks, and therefore I would expect that we will ‘beat’ the target of 8^th October 2040.