KEY TAKEAWAYS
- A Bitcoin halving event occurs when the reward for mining Bitcoin transactions is cut in half.
- Halving reduce the rate at which new coins are created and thus lower the available amount of new supply.
- Bitcoin last halved on May 11, [2020], resulting in a block reward of 6.25 BTC.
- The final halving is expected to occur in about 2140 when the number of bitcoins circulating will reach the theoretical maximum supply of 21 million.
What Is Bitcoin Halving?
After the network mines 210,000 blocks—roughly every four years—the block reward given to Bitcoin miners for processing transactions is cut in half. This event is called halving because it cuts the rate at which new bitcoins are released into circulation in half.
This rewards system will continue until about 2140, when the [proposed limit of 21 million coins] is reached. At that point, miners will be rewarded with fees for processing transactions, which network users will pay. These fees ensure miners are still incentivized to participate and keep the network going.
The halving event is significant because it marks another drop in the rate of new Bitcoins produced as it approaches its finite supply. In 2009, the reward for each block in the chain mined was 50 bitcoins. As of October 2023, about 19.5 million bitcoins were in circulation, leaving just around 1.5 million to be released via mining rewards.
When Did the Bitcoin Halving Happen?
There have been three halving as of October 2023:
- Nov. 28, 2012, to 25 bitcoins
- July 9, 2016, to 12.5 bitcoins
- May 11, 2020, to 6.25 bitcoins
What Happens When Bitcoin Halves?
The term “halving” as it relates to Bitcoin concerns how many tokens are rewarded. This acts as a way to simulate diminishing returns, theoretically intended to raise demand.
2024 is going to be the next halving.
