Who Creates New Bitcoin?
Table of Contents
- 6.25 new bitcoin are released roughly every ten minutes.
- New bitcoin are released when a miner generates a valid hash that allows a new block to be found and accepted by the network.
- The finite supply of Bitcoin will prevent new bitcoins from being released after the last bitcoin has been mined
New bitcoin are released through mining. When a miner finds a new block that is accepted by the network, the miner is granted the ability to mint 6.25 BTC. Every 210,000 blocks, the subsidy for each new block falls by half. Reducing the subsidy per block keeps the supply of new bitcoin at a constantly decreasing rate, and allows the current supply of bitcoin to always be known.
Bitcoin has a finite supply just below 21 million bitcoin. When the last bitcoin has been mined, the production of new bitcoin will end. Unless an overwhelming majority of the miners and node operators can convene to override the supply constraint, which is highly unlikely given the number of network participants required to change the framework of the blockchain, no new bitcoin will be released.
Miners receive new bitcoin as a reward for their efforts. However, almost all miners must pay their operating costs—new equipment, employee salaries, and most significantly, energy costs—in the local fiat currency. This forces most miners to immediately liquidate some if not all of their newly minted bitcoin. These new coins are sold on exchanges or OTC desks. Miners are thus a fairly consistent source of sell pressure on the network.
As Bitcoin’s inflation rate continues to be cut in half every four years, the impact of this miner-driven sell pressure will presumably decline as well. Additionally, if Bitcoin gains adoption within the energy sector, miners could begin paying some of their operating costs in Bitcoin.