Key takeaways
- Bitcoin's supply is fixed by code
- Inflation is predictable and shrinking
- enforce the rules and ensures
- Security is backed by massive investment
- Change to the code is possible in theory, but virtually impossible in reality
How 21M is written into Bitcoin
Bitcoin, at its core, is simply code. That makes the system predictable: every participant operates according to the same set of programmed rules. As a result, Bitcoin’s supply can be explained by a straightforward mathematical formula:
For those not fluent in maths, here’s what it means. When Bitcoin launched, the network rewarded with 50 bitcoins for every new they created. Every 210,000 blocks, roughly every four years, that reward is cut in half. The first drop was from 50 to 25, then 25 to 12.5, and so on. This “” process happens a total of 32 times, each time reducing the rate of new bitcoin entering circulation. Just as importantly, this formula ensures that there will only ever be 21 million issued.
(Source: Coinmetrics)
Looking at the chart, we can see Bitcoin’s inflation rate roughly halving every four years. Following the most recent halving in April 2024, the annual issuance rate, also called the inflation rate, is about 0.85%. The current supply is around 19.9 million bitcoins, or roughly 94.76% of the maximum 21 million. That leaves just over 1.1 million coins still to be mined. However, because each halving reduces the reward, those coins will be issued in ever smaller amounts over the next 115 years, with the final fractions around the year 2140. And unless the rules change, this schedule is fixed in code, there’s no mechanism to create more than 21 million bitcoins.
How can we be sure this limit will always be enforced and never changed in the future? To answer that, we need to understand three key pillars of Bitcoin: miners, , and .
How miners secure the network
and miners are computers running Bitcoin software. Nodes store a copy of the , enforce the rules, and relay valid transactions and to peers. Miners are a subset of nodes that compete to propose new . Every miner is a node, but not every node is a miner.
Each time a Bitcoin user sends a transaction, it is broadcast to the network and placed into the , the queue of unconfirmed transactions. From there, miners select which transactions to include in their next block, usually prioritizing those with the highest fees, since they get to keep those fees as part of their reward. Before adding them, miners validate each transaction against the blockchain’s rules. For example, ensuring there’s no double spending. Once the transactions pass validation, the miner bundles them into a candidate block. At that point, the race begins. Every miner in the network competes to solve a complex mathematical puzzle that allows them to add their block to the chain. But what exactly is this puzzle, and why are miners so eager to solve it?
To understand the “math problem” miners are racing to solve, you first need to know about SHA-256, short for Secure Algorithm 256-bit. In simple terms, it’s a cryptographic function that takes any input and produces a unique, fixed-length output called a hash.
For example:
- Input "1" = 6b86b273ff34fce19d6b804ef....7875b4b
- Input "2" = d4735e3a265e16eee03f5971g....ec13ab35
The key properties:
- One-way: It’s impossible to work backwards from the hash to the original input.
- Sensitive to change: Altering even a single character in the input produces an entirely different hash.
When miners create a candidate block, they include (among other data points) all the transactions they’ve chosen to process and the hash of the previous block (linking the chain together). These inputs, as well as a special number called a nonce, short for “number used once”, are fed into SHA-256 to produce a unique hash for that block. The nonce can range from 0 to about 4.29 billion. Miners make multiple attempts, changing only the nonce each time, until they find a hash that meets the network’s current difficulty target.
As a rule of thumb, the difficulty target is set so that the resulting hash must start with a certain number of zeros. This number of zeros changes every two weeks through a process called difficulty adjustment, ensuring that new blocks are found roughly every 10 minutes, no matter how much computing power is on the network.
What is unique about this is finding the right nonce is extremely hard, there’s no shortcut but trial and error. But verifying the nonce is easy, anyone can plug it into SHA-256 and instantly check if the hash starts with the required number of zeros.
This is the essence of Proof of Work: miners prove they have expended real computing effort to produce a valid block, and the rest of the network can instantly verify that work. That same process also ensures miners can’t produce blocks that grant them more bitcoin than the rules allow.
The first miner to find a valid nonce broadcasts their block to the network. Other nodes check that:
- All transactions follow Bitcoin’s rules (no double spending, valid signatures, etc.);
- The block’s hash meets the difficulty target;
- The nonce is valid, showing that the block’s hash meets the network’s difficulty target.
If it passes, the miner’s block is added to the chain, and they receive the block reward – both the newly issued bitcoins and the transaction fees. It’s also why, if you check a Bitcoin block explorer, you’ll see the latest blocks hash starting with 20 zeros. That’s the proof they met the network’s current difficulty target. A great tool to visualize this process is this blockchain simulator, well worth playing with.
(Source: Coinmetrics)
To put this into perspective, the current hash rate securing the Bitcoin network is about 909 EH/s (exahashes per second). To achieve hashing power, one needs two things: specialized hardware and electricity. The Antminer S21 Pro is one of the most efficient and powerful Bitcoin mining rigs available today, with a hash rate of 234 TH/s and a power draw of 3,500 watts, retailing for between $4,200 and $7,500.
At 909 million TH/s, the entire Bitcoin network’s hash rate is equivalent to running roughly 3.8 million Antminer S21 Pros simultaneously, hardware worth an estimated $16–29 billion. That would require about 13.5 gigawatts of power to operate, roughly the electricity consumption of a smaller country such as Argentina or Norway.
This massive investment in equipment, energy, and infrastructure is what makes the network secure, and why competing to mine the next block and earn Bitcoin rewards is an intensely capital, and energy-intensive endeavor. This sheer scale is one reason it’s nearly impossible for any single entity to gain control and alter Bitcoin’s monetary rules.
Understanding the logic behind Proof of Work is important, but understanding why decentralization matters is just as critical. You may have already caught on to two key points:
- Multiple participants: Miners compete against each other, but they’re not alone. There are also nodes: computers that don’t solve the math puzzle but verify each block against Bitcoin’s consensus rules and maintain a full copy of the blockchain. Even if a miner finds the correct nonce, the block will only be accepted by the network if it passes validation by these independent nodes.
- Historical linkage: Every block contains the hash of the previous block, creating a chain that links all the way back to the first one. Every miner and node keeps a historical copy of these blocks. Because even a tiny change in data produces a completely different hash, altering a past block would immediately make it unrecognizable to the rest of the network. The altered block’s hash wouldn’t match the copy stored by other participants, so it would be rejected. This is why Bitcoin is considered , changes to past data are instantly detectable and effectively impossible to pass through. Sneaking in a past transaction would be impossible. This immutability applies just as much to past transactions as it does to the supply schedule.
Together, Proof of Work and decentralization mean no single miner, developer, or group can simply decide to increase Bitcoin’s supply. These two principles are the main pillars supporting Bitcoin’s fixed supply and, by extension, its attribute as a store-of-value asset. Any attempt to create extra coins or alter the reward schedule would produce blocks instantly rejected by the rest of the network. But are there scenarios where the cap could be raised, or the system cheated?
Could the rules be bent?
While Proof of Work and decentralization form the backbone of Bitcoin’s resilience, there are still scenarios where, in theory, its fixed supply could be changed. After all, Bitcoin is ultimately just a network of participants agreeing to follow a specific set of rules written in code. So, what’s stopping people from simply changing that code?
Bitcoin’s code defines the core rules, such as the 21 million supply cap, block size, and mining difficulty. Every node runs software that enforces these rules. To change them, the network must agree to run new software, a process known as a fork. Because Bitcoin is open-source, anyone can copy the code, change the rules, and release their own version. But a doesn’t succeed just because the code exists, it needs enough hash power to produce blocks securely. Without a majority of miners supporting the new chain, it will be slow, vulnerable, and economically irrelevant. However, if enough miners and users adopt the new version while others refuse, the blockchain can split into two. This is called a hard fork, from that point on, the two chains share the same history up to the split, but follow different rules thereafter.
Changing the code requires massive coordination: miners, nodes, , and exchanges all need to upgrade to the new software. More importantly, there must be a strong economic incentive to abandon the proven, widely trusted Bitcoin in favour of an untested version that alters its fundamental rules. A well-known example is Bitcoin Cash. In 2017, part of the community wanted to increase Bitcoin’s block size to allow more transactions per second. They changed the code, miners who agreed switched over, and Bitcoin Cash was born. The rest of the network stayed with the original , which kept its rules and, over time, the vast majority of its community and value.
As we saw earlier, securing Bitcoin requires billions of dollars in mining hardware and the energy consumption of an entire nation. Convincing miners to abandon that investment to support a new, untested version of Bitcoin, one that changes its most fundamental rule, would require an extraordinary level of consensus and economic motivation. In practice, that makes altering Bitcoin’s fixed supply not just unlikely, but virtually impossible.
Conclusion
Bitcoin’s 21 million cap is not just a theoretical rule in the code, it’s reinforced by the network’s structure, the cost of securing it, and the incentives of those who participate. Proof of Work makes breaking the rules computationally prohibitive, decentralization prevents any single party from forcing changes, and the billions invested in hardware and energy give miners a strong reason to protect the value of the asset they help secure.
Yes, the rules could be changed in theory. But in practice, doing so would require near-total coordination across miners, nodes, exchanges, and users, and a willingness to undermine the very property that gives Bitcoin much of its value. For that reason, the fixed supply has held since Bitcoin’s creation, and there’s little reason to believe it won’t hold for decades to come.
