Bitcoin supply may not be fixed at 21M, says BlackRock
One of the world’s largest asset managers momentarily delighted Bitcoiners today when it released a three-minute advertisement for bitcoin (BTC). Just 90 seconds into the video, however, delight turned to dismay when viewers spotted BlackRock’s finely printed supply disclaimer overlaid atop an otherwise glowing overview of the currency’s monetary credentials.
In the video, which was amplified by MicroStrategy Chairman Michael Saylor, BlackRock disclaimed, “There is no guarantee that bitcoin’s 21 million supply cap will not be changed.”
The disappointment at the sighting was palpable.
Bitcoiners labeled it “misinformation,” “FUD,” “underhanded,” “laughable,” and a homophonic euphemism for retarded. The topic immediately trended on X.
Unbeknownst to most Bitcoiners, that disclaimer is also present in BlackRock’s prospectus for its spot BTC ETF. IBIT, the world’s largest spot BTC ETF, discloses various risk factors to investors in its Securities and Exchange Commission (SEC) filings. One of those risks is that the supply of BTC might increase beyond 21 million.
“Although many observers believe this is unlikely at present, there is no guarantee that the current 21 million supply cap for outstanding bitcoin, which is estimated to be reached by approximately the year 2140, will not be changed. If a hard fork changing the 21 million supply cap is widely adopted, the limit on the supply of bitcoin could be lifted, which could have an adverse impact on the value of bitcoin.”
-BlackRock
It’s a remote possibility– so remote as to be “laughable” or “FUD,” according to some — yet BlackRock’s lawyers consider it pertinent to an average investor’s decision-making.
How would bitcoin’s supply exceed 21 million?
The first possibility of a supply increase is a bug. There were a few hours in Bitcoin’s nascent history, for example, when the BTC supply briefly exploded over 184 billion. Satoshi Nakamoto corrected that August 2010 bug, known as the “value overflow incident,” within hours.
Patched up and operating smoothly ever since, it’s hard to take the threat of any new bugs seriously — especially with a $2 trillion prize attached to any successful hack.
Nevertheless, although BTC’s supply has continuously remained below 21 million for more than a decade with no foreseeable inflation bugs, it’s technically possible that someone might exploit an esoteric bug in the future and briefly alter its supply.
For this reason, BlackRock must legally disclaim the 21 million supply cap of BTC. In its IBIT prospectus, BlackRock notes on page 57, “the 21 million supply cap could be changed in a hard fork.”
Read more: Did Michael Saylor pay Bitcoin developers to stop working?
If not an inflation bug, then a voluntary fork
The second possibility for breaching BTC’s 21 million supply cap is a voluntary hard fork.
BTC’s maximum supply is rigid, with zero tail emissions. One researcher estimates it at 20,999,817.31308491 or less. However, there have been various proposals to increase the quantity of circulating BTC via a voluntary fork, such as Peter Todd’s tail emissions proposal.
Tail emissions are a type of proposal that would financially incentivize miners when Bitcoin’s mining reward drops to zero in the year 2140. Although most variants of tail emissions propose recirculating provably burned or unspendable BTC into mining rewards — thereby honoring the 21 million cap — some variants of tail emissions propose lifting the supply cap slightly in order to incentivize miners to secure the network beyond 2140 if transaction fees do not sufficiently subsidize miners’ electricity, machinery, and effort.
However, there are vanishingly few Bitcoiners who currently support any version of tail emissions that exceed BTC’s current supply cap.
There will never be more than 21 million bitcoin.*
Operators of nodes around the world enforce the current version of Bitcoin’s mining rules. Anyone who tries to validate a block or transaction that doesn’t comply with BTC’s 21 million supply cap will be rejected by the vast majority of these nodes.
With over 15 years of consistent enforcement of this supply cap, there are very few people who think BTC’s supply limit will ever change.
There are at least 67,000 nodes around the world that enforce BTC’s 21 million supply cap, and about 19,000 are online and reachable at any given moment. All of them stand guard to defend against any breach of this ceiling.
*From the perspective of a BlackRock lawyer, however, they would still prefer to note the risk — even if it is in fine print.
Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.