What is the bitcoin halving?

The bitcoin halving is a scheduled event that cuts the reward paid to bitcoin miners in half. It happens every 210,000 blocks, or roughly every four years. It is how bitcoin slows the creation of new coins until the supply reaches its 21 million limit.

How does the halving work?

New bitcoin is created in only one way. Each time a miner adds a block of transactions to the blockchain, the software lets that miner claim a set number of new coins, called the block reward. Bitcoin mining produces a block about every 10 minutes.

The rule written into the code is that this reward drops by half after every 210,000 blocks. Nobody votes on it and nobody triggers it. When the right block number arrives, every node, meaning every computer that checks the ledger, starts enforcing the lower reward.

When have halvings happened?

• January 2009: bitcoin launches with a reward of 50 bitcoin per block.
• November 2012: first halving, to 25 bitcoin.
• July 2016: second halving, to 12.5 bitcoin.
• May 2020: third halving, to 6.25 bitcoin.
• April 2024: fourth halving, to 3.125 bitcoin.

The next halving, to 1.5625 bitcoin, is expected around 2028. The exact date cannot be known in advance because it depends on how quickly blocks are found. The process continues until about 2140, when the reward shrinks below the smallest unit of bitcoin, the satoshi, and stops.

Why does the halving matter?

The halving is the mechanism behind bitcoin's fixed supply. Because the reward keeps shrinking, the total number of coins approaches 21 million and never exceeds it. Half of all the bitcoin that will ever exist was issued before the first halving in 2012.

For miners, a halving is an overnight pay cut. Their costs for electricity and machines stay the same while their income in new coins falls by half. Less efficient operators can be forced to shut down, and transaction fees become a larger share of what miners earn.

Does the halving affect the price?

This is the most debated question about the event. Supporters argue that slower growth in supply, with steady or rising demand, should support the price. Bitcoin's price did rise in the period after each earlier halving.

Skeptics see several problems with reading much into that. There have been only four halvings, and each took place in different economic conditions. The schedule is public years ahead, so traders can factor it in early. Wider forces, such as interest rates and regulation, also move crypto prices. Past patterns are not a reliable guide to what happens next.