Block Reward and Halving: Why Miners Get Paid Less Over Time

Every time a Bitcoin miner successfully finds a valid block, they get paid in freshly created bitcoin. This payment is called the block reward, and it’s literally how new bitcoin enters existence. But here’s the twist: that reward gets cut in half roughly every four years. It started at 50 BTC per block, and it has been slashed four times since Bitcoin’s birth. This process is called the halving, and it’s one of the most important economic mechanisms in all of cryptocurrency.

Let’s explore where bitcoin comes from, why Satoshi designed the supply to shrink over time, and what this all means for miners trying to make a living.

The Genesis Block: Where It All Started

On January 3, 2009, Satoshi Nakamoto mined the very first Bitcoin block — block number 0, known as the genesis block. This block carried a reward of 50 BTC. At the time, those 50 bitcoin were worth exactly nothing. There was no exchange, no market, no price. Just code running on a single computer.

The genesis block is famous for containing a message Satoshi embedded in the coinbase transaction:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”

A newspaper headline from that day. Whether it was a political statement, a timestamp proof, or both, it permanently anchored Bitcoin’s creation to a moment in financial history.

From that point forward, every block mined awarded the miner 50 BTC. Block after block, 50 fresh bitcoin entered circulation roughly every 10 minutes. At that rate, 7,200 BTC were being created every single day (50 BTC x 144 blocks per day).

What Is Halving?

The Bitcoin protocol contains a simple rule: every 210,000 blocks, the block reward is cut in half. Not reduced by 10% or 25% — literally divided by two.

At roughly 10 minutes per block, 210,000 blocks takes approximately 4 years:

210,000 blocks x 10 minutes = 2,100,000 minutes
2,100,000 / 60 / 24 / 365 = approximately 3.99 years

This rule is not a suggestion and is not voted on. It’s hard-coded into Bitcoin’s consensus rules. Every full node enforces it. A block that claims a reward larger than the current schedule allows is rejected by the network as invalid — no exceptions.

Note

The halving is based on block height (the block number), not on a calendar date. Since blocks don’t arrive at exactly 10-minute intervals, the actual calendar date of a halving can vary by weeks. When hashrate is growing quickly, blocks come slightly faster, and the halving arrives a bit ahead of schedule.

The Complete Halving History

Here’s every halving that has occurred, plus what’s coming next:

Era	Block Range	Reward per Block	Approximate Date	Daily BTC Created
Era 1	0 - 209,999	50 BTC	Jan 2009 - Nov 2012	7,200 BTC
Era 2	210,000 - 419,999	25 BTC	Nov 2012 - Jul 2016	3,600 BTC
Era 3	420,000 - 629,999	12.5 BTC	Jul 2016 - May 2020	1,800 BTC
Era 4	630,000 - 839,999	6.25 BTC	May 2020 - Apr 2024	900 BTC
Era 5	840,000 - 1,049,999	3.125 BTC	Apr 2024 - ~2028	450 BTC
Era 6	1,050,000 - 1,259,999	1.5625 BTC	~2028 - ~2032	225 BTC

The First Halving: November 28, 2012

Block 210,000 dropped the reward from 50 to 25 BTC. Bitcoin was still relatively obscure at this point, trading around $12. Mining was done with GPUs and early FPGAs. The halving was anticipated by the small community but wasn’t a major market event.

The Second Halving: July 9, 2016

Block 420,000 reduced the reward from 25 to 12.5 BTC. By now, ASIC miners dominated, Bitcoin had survived multiple crises, and the price was around $650. This halving received significant media attention for the first time.

The Third Halving: May 11, 2020

Block 630,000 cut the reward from 12.5 to 6.25 BTC. This happened during the COVID-19 pandemic, with Bitcoin at roughly $8,700. Industrial-scale mining was now the norm, with entire data centers dedicated to SHA-256 hashing.

The Fourth Halving: April 19, 2024

Block 840,000 reduced the reward from 6.25 to 3.125 BTC. Bitcoin was around $64,000. The halving was widely covered in mainstream financial media. By this point, the block reward was shrinking in BTC terms, but the fiat value per block (roughly $200,000) was still substantial due to price appreciation.

Tip

Notice a pattern? Each halving reduces the new supply entering the market. If demand stays the same or grows, less new supply means upward price pressure. This is not guaranteed to cause a price increase, and past halvings are not predictive, but the supply reduction is a mathematical fact.

Why Satoshi Designed It This Way

The halving schedule wasn’t arbitrary. It implements two fundamental design goals:

1. Digital Scarcity: The 21 Million Cap

By cutting the reward in half repeatedly, the total number of bitcoin that will ever exist converges on exactly 21 million. Here’s the math:

Era 1: 210,000 blocks x 50 BTC    = 10,500,000 BTC
Era 2: 210,000 blocks x 25 BTC    =  5,250,000 BTC
Era 3: 210,000 blocks x 12.5 BTC  =  2,625,000 BTC
Era 4: 210,000 blocks x 6.25 BTC  =  1,312,500 BTC
Era 5: 210,000 blocks x 3.125 BTC =    656,250 BTC
...and so on, each era producing exactly half of the previous one

This is a geometric series: 10,500,000 + 5,250,000 + 2,625,000 + … The sum converges to exactly 21,000,000.

Think of it like cutting a pizza. If you eat half, then half of what’s left, then half of that, forever — you’ll never quite finish the whole thing, but the total you eat approaches the full pizza. In Bitcoin’s case, the total approaches but never exceeds 21 million.

2. Controlled Supply: Mimicking Precious Metals

Satoshi explicitly compared Bitcoin to gold mining. Gold gets harder to mine over time — surface deposits are found first, then you need to dig deeper mines, use more advanced equipment, and spend more energy per ounce. The rate of new gold entering the market naturally decreases.

Bitcoin’s halving schedule creates the same dynamic artificially. Early on, bitcoin was abundant and cheap to mine. Over time, less new bitcoin is created per block, making the remaining supply scarcer. This controlled emission schedule is predictable — anyone can calculate exactly how many bitcoin will exist at any point in the future.

Note

Unlike central bank currencies where the money supply can be increased at any time by a policy decision, Bitcoin’s supply schedule is known from day one and cannot be changed without consensus from the entire network. This predictability is one of Bitcoin’s core value propositions.

When Will All Bitcoin Be Mined?

The last bitcoin will be mined around the year 2140. But in practical terms, the block reward becomes negligibly small long before then. By around 2036 (Era 8), the reward will be less than 0.2 BTC per block. By 2048, it’ll be less than 0.02 BTC. Eventually, the reward is so small that it rounds down to zero in Bitcoin’s smallest unit (the satoshi, which is 0.00000001 BTC).

The last meaningful halving — where the reward goes from 1 satoshi to 0 — will happen around block 6,930,000, estimated around the year 2140.

What Halving Means for Miners

Here’s where things get personal if you’re a miner. Every halving is essentially a 50% pay cut. One day you’re earning 6.25 BTC per block, and the next day (literally the next block), it’s 3.125 BTC.

The Profitability Squeeze

After each halving, miners who were barely profitable suddenly aren’t. The math is simple:

Before halving: Revenue = 6.25 BTC x price per BTC After halving: Revenue = 3.125 BTC x price per BTC

If your electricity cost was $0.08/kWh and you were earning a 20% margin, a 50% revenue cut wipes out your profit entirely and then some. You’re now operating at a loss.

This creates a predictable cycle:

1. Halving occurs — Miner revenue drops 50% overnight
2. Inefficient miners shut down — Those with high electricity costs or old hardware can’t profit
3. Network hashrate drops — Less mining hardware online means lower total hashrate
4. Difficulty adjusts downward — Bitcoin’s difficulty algorithm compensates, making mining easier for survivors
5. Surviving miners earn a larger share — With less competition, each remaining miner’s slice of the pie grows
6. If price increases — Revenue recovers even for some miners who initially shut down

The Efficiency Arms Race

Each halving intensifies the pressure on miners to be as efficient as possible. After the 2012 halving, GPU miners were replaced by ASICs. After each subsequent halving, older-generation ASICs became unprofitable and were retired, replaced by newer, more efficient models.

Today, the difference between a profitable mining operation and a failing one often comes down to:

• Electricity cost — The single biggest factor. Miners at $0.03/kWh survive halvings that kill miners at $0.08/kWh.
• Hardware efficiency — Newer ASICs produce more TH/s per watt. A miner running S21s (17.5 J/TH) has a massive advantage over someone still running S17s (45 J/TH).
• Scale — Larger operations get bulk electricity discounts, better hosting rates, and can spread fixed costs across more machines.

Caution

If you’re planning to buy mining hardware, always model your profitability projections assuming the next halving will occur. A miner that’s profitable today might not be after the reward drops by 50%. Calculate your break-even electricity price at half the current block reward and see if you’re still comfortable.

Transaction Fees: The Growing Importance

As the block reward shrinks, transaction fees become a proportionally larger part of a miner’s income. This was always part of the design. Satoshi anticipated that once the block reward becomes negligible, miners would be incentivized entirely by transaction fees.

How Transaction Fees Work

Every Bitcoin transaction includes a fee paid by the sender. Miners include transactions in their blocks and collect all the fees. The total block income is:

Total per block = Block reward + Sum of all transaction fees

In the early days, transaction fees were negligible — a tiny fraction of the 50 BTC reward. But over time, as block space has become more valuable and the reward has shrunk, fees have grown in significance.

Fees as a Percentage of Block Income

The ratio of fees to total block income has been shifting:

Era	Block Reward	Typical Fee Revenue	Fees as % of Total
2012 (pre-halving)	50 BTC	~0.01-0.1 BTC	Less than 1%
2016-2020	12.5 BTC	~0.1-2 BTC	1-15%
2020-2024	6.25 BTC	~0.2-5+ BTC	3-40%+
2024-present	3.125 BTC	Varies widely	Growing share

During periods of high network activity, transaction fees can temporarily exceed the block reward. This has already happened during fee spikes caused by high demand. As the block reward continues to halve, fees will eventually dominate miner income entirely.

Tip

This is why many mining analysts focus on total block income (reward + fees) rather than just the block reward. The halving cuts the subsidy, but if fees grow enough, total income can remain stable or even increase despite the reward shrinking.

Future Halvings: What to Expect

Looking ahead, the next several halvings are approximately:

Halving	Approximate Year	New Reward	BTC Mined So Far (approx)
5th	~2028	1.5625 BTC	~20,343,750
6th	~2032	0.78125 BTC	~20,671,875
7th	~2036	0.390625 BTC	~20,835,938
8th	~2040	0.1953125 BTC	~20,917,969

Notice how by 2032, over 20.6 million of the total 21 million bitcoin will already exist. The remaining ~330,000 BTC will be mined over the following century-plus. The supply curve flattens dramatically — most bitcoin that will ever exist has already been mined.

The Halving Is Not Magic

Let’s be clear about what halving does and doesn’t do:

What it does:

• Reduces the rate of new bitcoin creation by exactly 50%
• Increases the stock-to-flow ratio (existing supply vs. new supply)
• Forces inefficient miners off the network
• Shifts miner revenue composition toward transaction fees

What it doesn’t do:

• Guarantee a price increase (there’s no economic law that says it must)
• Affect already-existing bitcoin in any way
• Change the difficulty algorithm or how mining works
• Happen on a fixed calendar date (it’s based on block height)

Quick Recap

• The block reward is how new bitcoin is created — miners earn it for successfully mining blocks.
• The halving cuts this reward in half every 210,000 blocks (roughly every 4 years).
• The reward started at 50 BTC (2009) and is currently 3.125 BTC (since April 2024).
• This schedule creates a hard cap of 21 million BTC total supply.
• Each halving is a 50% pay cut for miners, forcing out inefficient operations and driving hardware innovation.
• Transaction fees are becoming a larger share of miner income and will eventually replace the block reward entirely.
• The last bitcoin will be mined around 2140, but over 98% of all bitcoin will exist by around 2040.

Now that you understand where mining revenue comes from and why it decreases over time, the next article explains mining pools — how miners team up to smooth out the extreme variance of block-finding and turn that lottery-ticket reward into something closer to a steady paycheck.