What will Bitcoin on-chain TX fees be in 2140 when mining rewards end?

When Bitcoin mining first started, the mining reward was 50 BTC per block. It then dropped to 25 BTC, and then 12.5 BTC where it is today. The reward halving will continue until approximately the year 2140 when rewards will stop completely and all 21,000,000 Bitcoins are in circulation.

Once the rewards stop, miners will be paid entirely derived from TX fees. This is one of the reasons why small block proponents are so strongly for increasing TX fees. If there are no fees, there is no security on the network.

But what does this actually mean if the Bitcoin block size remains at 1 MB forever?

Assumptions

To even begin looking for a figure some baseline assumptions must be made about how adoption will pan out in the year 2140:

• Cryptocurrency will completely replace the fiat system worldwide.
• Bitcoin dominance will remain consistent.
• TX fees will replace block rewards 1:1.

We will make no assumptions about inflation since we only care about relative value, and we also will not try to estimate any benefits from future improvements such as Schnorr signatures.

Bitcoin Market Cap and Price in 2140

According to the CIA, there is approximately $80 trillion dollars worth of money in the world, most of which are US dollars. If we assume a 100% conversion to cryptocurrency with the current Bitcoin dominance of 55.2%, Bitcoin will have a market cap of $44.16 trillion dollars.

This means the baseline price of 1 BTC would be $2,102,857 USD, assuming that all 21m Bitcoins were still intact. Estimates believe that up to 23% of all Bitcoin is lost today, and this number will only continue to grow. Assuming a 50% loss, the baseline price per BTC would be $4,205,714 USD.

Bitcoin Market Cap to Block Reward Ratio

The basis behind Bitcoin’s Proof of Work security is economic. As the market cap increases, so does the value of the coins mined as rewards. The security of the network, therefore, does not reflect a constant price, but a ratio.

The current Bitcoin market cap is $145,979,300,090, and the total reward per block is approximately $109,206. This gives a ratio of 1,336,733:1 per block, or 3,662:1 per year.

Bitcoin TX Fee Calculation

Putting it all together. A $44.16 trillion dollar market cap with a 1,336,733:1 ratio per block would yield a per block TX fee reward of $33,035,767. Using the current average of 2,500 transactions per block, this gives an average fee of… (drum roll sound)… $13,214 USD per transaction!

This estimate is based on $80 trillion dollars of wealth from fiat. If you include wealth shifting from derivatives into the crypto markets, that’s another whopping $1.2 quadrillion dollars. With speculation and volatility, it could actually go much higher.