Understanding Bitcoin’s Supply Formula
Bitcoin’s total supply is capped at 21 million coins, a limit set by its creator, Satoshi Nakamoto. This is achieved through a process called “halving,” where the reward for mining new blocks is cut in half every 210,000 blocks, or roughly every four years.
The formula for calculating the total supply of Bitcoin is seen on the image.
The 210,000 is the number of blocks per era, 50 is the initial block reward (in BTC), and each era halves the reward, represented by $2^n. For example, the first era produces 10,500,000 BTC, the second 5,250,000 BTC, and so on, with each subsequent era producing half as much as the last. This geometric series converges at 21 million BTC, ensuring scarcity and making Bitcoin a deflationary digital currency.
