A relatively common concern amongst those in the Bitcoin community is the hypothetical scenario in which miners stop selling the bitcoin that they generate. First of all, this hypothetical scenario is extremely unlikely to happen for a variety of reasons we will explain.
However, we will entertain the thought experiment and discuss what will happen if miners suddenly decide to stop selling bitcoin – don’t worry, it’s not as bad as it sounds.
Why Miners Won’t Stop Selling Bitcoin
First of all, the entire assumption of this question is flawed because it’s extremely unlikely that miners will stop selling bitcoin for exactly one reason:
Miners must pay expenses, which necessitates them selling bitcoin on the market.
For those that don’t know, Bitcoin miners are people or (usually) companies that have special computers designed to provide power to the Bitcoin blockchain. These computers obviously use electricity and are also stored in buildings that require the miners to pay rent.
Additionally, most bitcoin miners are not individuals with a single mining rig in their garage. Instead, most bitcoin mining is done by companies around the world (mostly China, though) with millions invested in mining rigs, electric bills, employees, and rent for the warehouse to store the mining rigs.
Simply put, bitcoin miners cannot afford to simply not sell their bitcoin. The bitcoin the miners earn is generally sold for fiat currency very quickly and used to pay the many expenses necessary to run a bitcoin mining operation.
With that in mind, not all bitcoin miners are massive companies with an electric bill in the hundreds of thousands per month. Any individual can buy an ASIC and start mining.
It’s important to keep in mind that those miners make up such a small portion of the total hash rate (mining power) and receive such a small bitcoin reward that those individuals deciding not to sell their bitcoin has little to no effect on the market.
To summarize, bitcoin miners will not decide to stop selling their bitcoin – there are simply too many expenses involved in the mining of bitcoin on such a large scale for this to be a feasible scenario.
This Will Happen If Miners Stop Selling Bitcoin
With the likelihood of bitcoin miners to stop selling their bitcoin at near 0 for the foreseeable future, that leaves this question as a sort of moot hypothetical point.
However, this section will explain what would happen if for some unknown reason bitcoin miners decided to stop selling their bitcoin.
If bitcoin miners decide to stop selling their bitcoin, then the effect on the market will actually be a positive one. But it might not be as dramatic as many believe.
Bitcoin miners mine about 144 blocks per day and each block has a reward of 6.25 bitcoin, which equates to 900 new bitcoin per day. Additionally, there is about 180 bitcoin paid in fees per day, which also goes to miners.
For simplicity, we will go with bitcoin miners collecting about 1000 bitcoin per day – about $50 million worth of bitcoin per day is split amongst miners.
That’s a lot of bitcoin and it would add up to nearly a billion dollars worth in less than a month.
So, with that in mind, the price of bitcoin would likely increase dramatically as the total supply of bitcoin available for sale would drop. Further compounding this is the fact that the price increase in bitcoin would likely lead to higher transaction fees as the popularity of the coin grows, and that would mean the miners would collect that much more bitcoin.
To summarize, the extremely unlikely hypothetical scenario of every single bitcoin miner deciding to hodl their bitcoin would result in a dramatic increase in the price of bitcoin as the total supply available for sale would decrease dramatically.
Again, we can’t emphasize this enough, this hypothetical scenario will not happen. But there is one scenario that could, and will eventually in the very long term future, happen that bitcoin must figure out how to deal with if it is to survive.
What Happens if Miners Stop Mining Bitcoin?
The more likely scenario to occur is that bitcoin miners decide to stop mining bitcoin. Again, this scenario is not all that likely to occur with a current block reward of 6.25 BTC per block. But that block reward will half every 4 years until it eventually reaches 0 BTC per block.
The estimated year for that is 2140, which is long enough away that it’s not even worth worrying about.
More importantly, miners will not stop mining bitcoin because the mining difficulty reduces with when there are less miners, which is a way to encourage miners to start mining.
The one scenario that could result in miners completely abandoning bitcoin is a power outage, which does occur from time to time. There was recently a major power outage in a popular bitcoin mining region of China that resulted in a major reduction in the hash rate and caused a dip in the price of bitcoin.
The good thing with bitcoin is that it can be mined from anywhere. And power outages are generally limited to certain regions, so miners in other regions will pick up the slack until the power in the affected region is stored.
Now, if there is a global power outage, then bitcoin will obviously collapse as the transactions cannot be completed.
However, bitcoin holders will have much bigger problems than the price of bitcoin in the event of a global power outage. Food and water will likely be a lot more than bitcoin in that scenario.
Fortunately, the likelihood of a global power outage are extremely low.
Overall, the likelihood of miners all deciding to stop selling bitcoin simultaneously is as close to 0% as possible. The good news, however, is that if bitcoin miners did decide to stop selling bitcoin the price of bitcoin would rise rather dramatically.
There is nothing to worry about in that scenario.
On the other hand, if bitcoin miners decided (or were forced) to stop mining bitcoin, then the price would collapse. In fact, the entire blockchain would collapse as the hash rate necessary to fulfill transactions would simply not be high enough.
The good news is that miners will not stop mining bitcoin as long as there is some incentive and they have electricity. There will always be an incentive and the decentralized nature of bitcoin means that it would take a global power outage for miners to stop mining. And a global power outage would result in much bigger problems than the success of bitcoin.
To summarize, don’t worry about this hypothetical scenario – it will not happen.