Halving
The halving (sometimes called “the halvening”) is a programmed event in the Bitcoin protocol that cuts the block subsidy in half every 210,000 blocks, approximately every four years. It is a core mechanism that controls Bitcoin’s monetary supply.
Understanding the Halving
Section titled “Understanding the Halving”Bitcoin’s creator, Satoshi Nakamoto, designed the protocol so that the supply of new bitcoins entering circulation would decrease predictably over time. The block subsidy started at 50 BTC in 2009 and has been halved several times since:
- 2009: 50 BTC per block (genesis)
- 2012: 25 BTC per block (first halving)
- 2016: 12.5 BTC per block (second halving)
- 2020: 6.25 BTC per block (third halving)
- 2024: 3.125 BTC per block (fourth halving)
Imagine a farmer who harvests a field every season, but each season the field produces exactly half as much grain as the season before. The total amount of grain that can ever be harvested from this field is finite and predictable. Similarly, the halving schedule guarantees that only 21 million bitcoins will ever exist.
For miners, the halving is a significant economic event. Their revenue from the block subsidy drops by 50% overnight, while their costs (electricity, hardware, facilities) remain the same. Miners who are not efficient enough to remain profitable at the reduced subsidy are forced to shut down, which can temporarily reduce the network hashrate until the difficulty adjusts.
Practical Example
Section titled “Practical Example”Before the April 2024 halving, a pool finding 6 blocks per day earned 6 x 6.25 = 37.5 BTC daily in subsidies. After the halving, the same 6 blocks earn only 6 x 3.125 = 18.75 BTC in subsidies. If the Bitcoin price does not increase enough to offset this, less efficient miners may become unprofitable and power down their machines.