Recently, many people have been discussing why Bitcoin has only 21 million coins. Actually, there’s an interesting mathematical logic behind this.

Bitcoin is called digital gold, and the core reason is scarcity. Like real gold, Bitcoin’s total supply is capped and will never exceed 21 million coins. This design gives it the property of value preservation, which is also why so many people are optimistic about its long-term value.

So, where does the 21 million figure come from? In fact, Satoshi Nakamoto used a clever mathematical algorithm when designing Bitcoin. Simply put, it relies on the convergence principle of a geometric series—every 210,000 blocks mined (about 4 years), the block reward halves. Initially, each block rewarded 50 bitcoins, and over the first four years, a total of 10.5 million coins were produced. Then the reward drops to 25, then 12.5, and so on. Following this series, the limit converges exactly to 21 million coins.

Why must coins be mined to be produced? Because Bitcoin uses a fully decentralized ledger system. There’s no central bank, no third-party institutions; all transaction records are distributed across the blockchain. To ensure the system’s security and reliability, miners verify transactions through computational work. This process is essentially a competition—whoever finds a hash value that meets the protocol’s requirements first can record the new block and earn the reward. As mining difficulty increases, miners need to invest more computing power, and costs rise accordingly. Sometimes, difficulty spikes so high that small miners may go bankrupt due to high costs, which is a natural market elimination process.

Bitcoin’s halving cycle is the core of its supply mechanism. When Bitcoin was born in January 2009, the mining reward was 50 coins. The first halving occurred in November 2012, reducing the reward to 25 coins; in July 2016, it halved again to 12.5 coins; and in May 2020, it halved to 6.25 coins. The upcoming fourth halving in April 2024 will reduce the reward to 3.125 coins. Each halving event attracts market attention because it directly impacts the rate of new coin issuance.

Currently, the circulating supply of Bitcoin has exceeded 20.01 million coins, with a circulation rate over 95%. The remaining Bitcoins will be produced at an increasingly slower rate until around 2140, when all coins are mined. By then, miners’ income will come entirely from transaction fees.

By the way, Bitcoin also has five units: the largest is Bitcoin itself (BTC), then there’s the centibit (0.01 BTC), millibit (0.001 BTC), microbit (0.000001 BTC), and the smallest unit is called Satoshi, named after the creator’s last name. 1 Satoshi equals 0.00000001 Bitcoin. This design also reflects Bitcoin’s ingenuity—no matter how high the price, it can be infinitely subdivided for use.