Per Blockchain.info, mining of the 17 millionth bitcoin (BTC) was done late last month. With the supply of bitcoins limited to 21 million it means the number of bitcoins left to be mined is four million or thereabouts. This digital scarcity is one of the factors that bitcoin bulls tout when trying to argue that the price of the virtual currency is headed north.
When it comes to the mining of bitcoins, miners create a new block every ten minutes. Basically a block is a subgroup of individuals or mining pools running the computer nodes which ensures that bitcoin remains operational. All transaction data involving bitcoins is stored by powerful computers while updating as the addition of new transactions is done. To ensure they keep mining the reward for miners is bitcoin. For every block that is mined miners currently receive 12.5 bitcoins. This results in the creation of 1,800 bitcoins per day.
However the reward for every block has not and will not always be 12.5 bitcoins as this is a figure that varies due to a process known as halving. Some years ago the reward per block that the miners used to get was 50 bitcoins. With the halving process the rewards that miners receive are cut by 50% every time 210,000 blocks have been mined. In 2012 the reward was 25 bitcoins. The next halving is expected to occur either late next year or in early 2020.
The halving feature of bitcoin allows the digital currency to get more valuable as it gets scarcer. The feature also ensures that the rewards are kept relatively proportional and to prevent miners from having too much control over the supply. Besides the supply of bitcoin falling with the passage of time the process of mining also slows down.
In a sense therefore bitcoin is like gold due to the scarcity element. However unlike gold which is mining by extracting the precious metal from the earth the mining of bitcoin is done using computer processing power. By solving complex mathematical problems miners using the mining rigs or specialized computers are rewarded with bitcoin.