Mining rewards decrease, transaction fees become new driving force
With 94% of the 21 million Bitcoins in existence already mined, many are beginning to worry about the long-term sustainability of this digital asset. However, the latest data and expert analysis show that the Bitcoin ecosystem will be able to adapt to changes and continue to thrive.
Bitcoin’s halving mechanism plays a key role in the mining process. By that time in 2032, over 99% of the Bitcoin supply will have been released. Due to the effects of the halving, it will take over 100 years for the last 1% of Bitcoins to be mined. When mining rewards gradually decrease, transaction fees will become the main source of income for miners.
On April 20, 2024, transaction fees reached 1,257.71 Bitcoins, accounting for more than 75% of miners’ revenue that day. Likewise, thanks to the memecoin craze and the launch of the Runes protocol, transaction fees exceeded block rewards for the first time, reaching $80.74 million in a single day. These phenomena indicate that transaction fees have the potential to sustain miners’ operations when block rewards cease.
The integration of new protocols, such as Runes, Ordinals, and a growing number of meta-layer protocols, has repeatedly increased network activity and congestion, resulting in increased transaction fees and miner revenue.
National-level adoption and renewable energy power Bitcoin’s future
Additionally, Bitcoin’s blockchain technology offers more opportunities beyond peer-to-peer transactions. Jason Lowery, the author of the book (SoftWar), suggested the establishment of the "US Hash Force" (US Hash Force) to use the underlying technology of Bitcoin to protect the increasingly important digital world. The force will be a new component of the U.S. military focused on leveraging Bitcoin’s Proof-of-Work (PoW) consensus mechanism for national security purposes.
More and more countries are adopting Bitcoin for currency and trade purposes. Seven countries, including Ethiopia, Kenya and Argentina, now conduct Bitcoin mining with direct government support. Russia has also piloted the use of cryptocurrencies for cross-border trade. This government-level adoption shows confidence in Bitcoin’s stability and potential as a global reserve asset, potentially aiding the global de-dollarization process.
However, U.S. Senator Cynthia Lummis believes that Bitcoin adoption could actually help the U.S. dollar maintain financial sovereignty and global influence. She introduced the National Optimizing Investments to Advance Innovation, Technology, and Competitiveness Act in the U.S. Senate, which aims to establish a strategic Bitcoin reserve to strengthen the U.S. dollar and pay down the national debt.
The adoption of renewable energy by miners is also another important trend. The Bitcoin Mining Council reports that 63.1% of the electricity used by its members comes from sustainable sources, bringing the global mining share of sustainable electricity to 59.9%. This not only reduces operating costs but also solves environmental issues. Miners are increasingly exploring renewable energy sources such as hydropower and geothermal energy, bolstering Bitcoin's reputation as one of the world's most sustainable industries.
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Diversified development demonstrates the resilience of the Bitcoin ecosystem
Miners are also diversifying into high-performance computing and artificial intelligence data centers. Companies like Core Scientific have scaled their infrastructure to support AI workloads, while Bit Digital now generates an estimated 27% of its revenue from AI. This shift in strategy enables miners to leverage existing computing resources for additional revenue streams, mitigating the impact of reduced mining rewards. According to Compass Mining, the push into AI and high-performance computing represents new business models for miners seeking to diversify.
Taken together, rising transaction fees, miners’ strategic diversification into AI and renewable energy, and country-level adoption suggest that Bitcoin is poised to survive and thrive even after all coins are mined. The Bitcoin ecosystem’s ability to adapt demonstrates its resilience and potential for continued growth in the future.
Further reading
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