Bitcoin hits ‘historical milestone’ amid supply shock price prediction

Only 10 per cent of cryptocurrency remains to be mined

The Lefdal Mine in Norway has been converted from a traditional olivine mine into a bitcoin and cryptocurrency mine (The Independent)

Less than 10 per cent of bitcoin remains to be mined after the cryptocurrency passed a major milestone on Monday.

Data from Blockchain.com shows that 18.9 million bitcoins out of a maximum 21 million are now on the open market as a result of mining – an energy-intensive process that requires vast amounts of computing power to generate new units of the digital currency.

The first coin was mined in January 2009 by bitcoin’s pseudonymous creator Satoshi Nakamoto, who hard-wired a “halving” event into the cryptocurrency’s underlying code in order to systematically reduce the supply of new BTC by half roughly every four years.

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The halving cycles mean that the bulk of the coins that will ever exist will be mined in the first few years, before gradually decreasing for more than a century.

The diminishing returns for miners mean that the remaining 10 per cent (2.1 million BTC) will take until 2140 to mine.

“Bitcoin has reached a historical milestone, as 90 per cent of the maximum 21 million bitcoin has been mined into supply,” Marcus Sotiriou, an analyst at the UK digital asset broker GlobalBlock, told The Independent.

“Bitcoin’s scarcity is one of its most attractive aspects as an investment, which is what many people, institutions and governments are starting to catch on to. I think bitcoin’s scarcity will lead to a supply shock for bitcoin to help it overtake gold’s market cap over the next 10 years, which is around $10 trillion.”

Should such a forecast be realised, the price of one bitcoin would be worth in excess of $500,000.

The price of bitcoin is currently less than a tenth of that, having struggled to return above $50,000 at the start of the week following the third biggest dip in 2021.

Bitcoin’s downward trajectory in recent weeks has been driven by a variety of factors, most notably renewed fears surrounding the new Omicron variant of Covid-19, however long-term projections remain positive due to the crypto’s shrinking supply.

One popular price prediction model divides bitcoin’s supply with its production to estimate market movements based on the four-year halving cycle.

This stock-to-flow (S2F) method of analysis puts bitcoin on track to hit six figures over the coming months, though the stagnating price has led some crypto experts to question its reliability as a forecast tool.