Good morning,
Today, I’m discussing Bitcoin’s block subsidy problem and highlighting parallels with the ongoing debate over reducing issuance on Ethereum.
Neither debate is likely to result in near-term protocol changes due to their lack of urgency, but if and when the need arises, it is worth considering what developers are likely to do about the block subsidy problem and the issuance reduction question.
On the Bitcoin side, my prediction is nothing, at least on the protocol level. Below, I explain why.
But first, I have a few Substack updates.
For readers who did not read last week’s ACD After Hours post, note that development summaries will now appear further down in the newsletter, after the main insights section.
Going forward, I am relying more on AI-powered tools, including Forkcast and the Bitcoin Orange Dev Suite, to help with summaries, whilst I focus my writing on analysis and insights.
I’m also changing the visibility of my posts starting this week. Instead of keeping insights permanently paywalled, posts will now be temporarily paywalled. Premium subscribers will get immediate access when posts are published. Free subscribers will be able to read the full version one week later.
My goal is to broaden access to my work for the wider subscriber audience, especially now that these newsletters will be more insight-driven.
Previously, summaries were free, and insights were paywalled. With the new format, the full post will be available to premium subscribers first, then opened to all subscribers after one week.
Feedback on these changes and your reading experience on my Substack are welcome. Thank you to all my subscribers for your readership.
Now, let’s get into it.
Yours truly,
Christine D. Kim
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Addressing Bitcoin’s block subsidy problem
On Tuesday, June 23, a pseudonymous user “show1225” posted a discussion thread on Delving Bitcoin about Bitcoin’s block subsidy problem.
The block subsidy problem is the concern that, over time, Bitcoin miners may not have enough revenue to keep securing the network once newly issued bitcoin becomes a smaller and smaller part of their compensation.
Today, miners earn 3.125 BTC, plus transaction fees, for every valid block they mine. Roughly every four years, this subsidy is cut in half. This process, known as the halving, is central to Bitcoin’s fixed monetary policy. It is the reason Bitcoin’s supply, under the current protocol design, will never exceed 21 million coins.
