How Many Bitcoins Are There? How Many Are Currently in Circulation?

06 Aug 2021

Bitcoin (BTC) is a radical alternative to fiat currencies like the U.S. dollar and the euro. It differs from them in several ways, one of them being its limited supply, which is capped at 21 million BTC. New bitcoins are generated at a fixed rate every year to ensure a predictable inflation rate.

In this guide, we’ll look at Bitcoin’s supply limit, why the cryptocurrency’s supply is limited, and what that means for users on the network. Hopefully, by the end of it you will have a better understanding of Bitcoin and why so many people support it. First, it’s important to understand a few basic concepts of the network.

Much like gold, bitcoin’s supply is limited. Gold miners extract the precious metal from mines on Earth as fast as they can. The World Gold Council estimates approximately 2,500 to 3,000 tonnes of gold are mined every year, and the precious metal’s supply is limited to what can be extracted from the ground. In the future, gold mining in space could be possible.

Similarly, Bitcoin relies on miners to increase its supply. Miners help secure the Bitcoin blockchain by validating transactions on the blockchain – a digital ledger that can be seen as a chain of blocks of data. Each block contains a specific number of transactions.

Miners are rewarded in two ways for their work securing the network. One is the coinbase transaction, which represents newly minted bitcoins. The other are the fees attached to transactions included in that block.

Why Is Bitcoin’s Supply Limited to 21 Million?

The 21 million limit was chosen by pseudonymous Bitcoin creator Satoshi Nakamoto. The figure may have been chosen to align with the M1 money supply of fiat currencies at the time Bitcoin was created, which was 21 trillion back in 2008.

At the time, in an email to Mike Hearn, Nakamoto explained their reasoning:

“I wanted to pick something that would make prices similar to existing currencies, but without knowing the future, that’s very hard. I ended up picking something in the middle.”

Nakamoto’s initial plan was to have 0.001 BTC be worth around 1 EUR or USD once adoption grew. The price of the cryptocurrency has since exploded, and 0.001 BTC is now worth over $40, as one bitcoin is trading above $40,000.

In that email, Nakamoto seemingly predicted the price of bitcoin would explode over the next few years. They explained that if bitcoin remained a small niche it would “be worth less per unit than existing currencies.”

However, imagining it “being used for some fraction of world commerce, then there’s only going to be 21 million coins for the whole world, so it would be worth much more per unit.” This does not end the reasoning behind the 21 million figure, however.

Satoshi Nakamoto’s Bitcoin white paper shows that 21 million aligns with some of the design in the Bitcoin software. Every 210,000 blocks (notice the 21) the coinbase reward attached to each block halves, and the figure can also be seen in the equation expressing Bitcoin’s block rewards.

In 2018, Ph.D. Christian Siberino explained that Satoshi likely went with the 21 million figure to “involve floating-point arithmetic.” While the limit seems arbitrary, BTC’s supply limit may have been chosen to avoid computer errors with the smallest unit of bitcoin, the satoshi. One satoshi is equivalent to 100 millionth of a bitcoin (0.00000001 BTC).

Siberino explained that floating-point arithmetic “is a type of mathematics used by computers to handle decimals. Decimals are often represented with 64 bits where one bit denotes the sign, 11 bits denote an exponent, and, 52 bits denote a fraction.” He added:

“To avoid rounding errors, it is often a good idea to avoid integers that cannot be represented with only the fraction bits. To be extra safe, it may help to also leave one fraction bit unused. With respect to 64 bit decimals, that would limit integers to 51 bits. The maximum integer that can be represented with 51 bits is just slightly over 2100 trillion.”

The limit was a hallmark for a lot off community members, as it means bitcoin holders are never going to feel the negative effects of hyperinflation. These same effects have been known to affect fiat currencies on a few occasions.

Understanding Fiat Currencies and Bitcoin’s Supply Limit

While central banks throughout the world are able to increase the supply of their own currencies, only consensus in the Bitcoin network would allow for the 21 million limit to be raised. Increasing the supply of a currency can have disastrous effects including hyperinflation, which describes the rapid and excessive price increases in an economy.

The term fiat is used to described government-issued currency that isn’t backed by a physical commodity such as gold or silver. Its value is derived from the relationship between supply and demand – and a government printing in excess could see supply greatly outstrip demand.

A currency backed by a physical commodity would, on the other hand, get its value from the value of the underlying commodity. Most fiat currencies used to be backed by a physical commodity, but governments moved away from this backing decades ago. In the U.S. the dollar was taken off the gold standard in 1971, for example.

The term fiat, Investopedia describes, is derived from a Latin word which means “a determination of authority.” Fiat currencies’ authority is determined by the governments, who decree their value. That kind of monopoly over money has several disadvantages in the eyes of the cryptocurrency community:

  • Governments can manipulate the value of their currency by printing too much or not enough;
  • Fiat currencies are at risk of inflation or hyperinflation;
  • Fiat currencies can be used as a system of control.

In extreme cases, inflation gets so out of control the value of a fiat currency essentially disappears. Zimbabwe, for example, printed notes worth trillions of Zimbabwean dollars before abandoning its currency in favor of the U.S. dollar. Bloomberg’s Café con Leche Index shows the annual inflation rate of the Venezuelan bolivar is of over 2,300%.

These disadvantages are to some deal-breakers, while others value the relative stability of fiat currencies as a plus for the economy. Moreover, central banks’ control over these currencies allows them to better implement monetary policy to either stimulate an economy through an expansionary policy or curb inflation through a contractionary policy.

A fixed supply ensures Bitcoin’s value is determined by supply and demand on the free market. This has at times meant bubbles formed rapidly, but it also meant they popped in a short amount of time and the market recovered naturally.

Bitcoin has, however, a small amount of inflation until the very last coin is mined. Its inflation is cut in half roughly every four years through the halving event.

How Many Bitcoins are Currently in Circulation?

There are about 18.8 million bitcoin in circulation at the time of writing, equivalent to nearly 90% of bitcoin’s total circulating supply as there are roughly 2.2 million BTC left to be mined. Every day, around 900 new coins enter the market.

These coins are added to the network each time a new block is mined. After the latest Bitcoin halving event, each new block comes with a base block reward of 6.25 BTC. Every 210,000 blocks, this figure is halved by design.

When Bitcoin was initially launched, each new block contained 50 BTC as a reward to the miner – these coins were, at the time, virtually worthless. In 2012, when block number 210,000 was mined, the reward dropped to 25. In 2016, it dropped to 12.5 BTC at block 420,000.The last halving was in 2020, at block 630,000.

In 2024, at block 840,000, block rewards will be cut to to 3.125 BTC. In 2028, when 1.05 million Bitcoin blocks have been mined, the block reward will drop to 1.5625 BTC, and so on.

It’s important to point out some of the bitcoin that’s currently in circulation is believed to be “lost.” We have to carefully use the term lost here, because we do know exactly where each BTC is – no coins have ever disappeared from the network. Instead, some BTC is locked in wallets that are no longer accessible, because their owners lost their keys or passed away without sharing them with someone else.

It’s estimated roughly 4 million BTC are locked in such a way, and as such are permanently out of circulation. Using blockchain data, we know 17.8 million BTC are in addresses that haven’t moved funds for at least five years, and are considered to be dormant.

The figure is misleading, however, as some of these coins are stored in secure wallets that are only touched when necessary. The keys to these wallets are kept offline, so the fact that so much BTC hasn’t moved could in a sense be seen as a good sign: there was no need to move the coins over the last five years.

Moreover, Satoshi Nakamoto is believed to have up to 1 million BTC. Nakamoto has never moved his coins and only a few addresses have been tied to him. It’s also not uncommon for bitcoin that had been dormant for a decade to suddenly move, showing those who controlled the coins were just holding them.

When Will the Last Bitcoin Be Mined?

As you may have noticed, halving events occur once roughly every four years. That’s because a new block is added to the Bitcoin network every 10 minutes or so – or at least it should.

The cryptocurrency’s rapid price rise has seen miners add computing power at an exponential rate, so much so that data shows blocks are being added approximately every 9.9 minutes. Nevertheless, in total there will only ever be 32 halving events.

Bitcoin is designed so that its supply caps at a total of 21 million coins. That limit is enforced by the underlying software behind it, and is expected to be reached by 2140. By then, the last bitcoin will be mined.

Naturally, a lot of things can change over a century. Some believe the Bitcoin community may eventually conclude that the supply needs to be increased, or Bitcoin may have by then have been overtaken by a superior cryptocurrency.

What Happens After the Last Bitcoin Is Mined?

The short answer here is: not a lot. Miners will keep on leveraging their computational resources to find new blocks to add to the network, and will continue to be rewarded in BTC for doing so. By then, however, their rewards will only come in the form of transaction fees included in each block.

Taking bitcoin’s current price and block size into account, modern mining operations would likely not be profitable in such a scenario. As mentioned above, however, a lot can happen in a century.

By then, energy costs may be so low miners could still make a profit, Bitcoin’s block size may have increased exponentially, or its price may be so high even a small amount of BTC is enough to keep large mining operations profitable.


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