What is the halving?

Imagine a machine that produces a set number of new coins every time it runs a cycle. After a predetermined number of cycles, it keeps working but produces half as many. That’s roughly how the halving works on Bitcoin: it changes the production of new bitcoin, not the coins already in your wallet.

Miners use computing power to add new blocks, meaning batches of transactions, to the blockchain. When a miner creates a valid block that the network accepts, they receive new bitcoin plus the fees of the block’s transactions. The halving only cuts the new bitcoin, not the fees.

The rule is built into the protocol and applies every 210,000 blocks. “Every four years” is an approximation, because the time between blocks varies. In the 2024 halving, for example, issuance dropped from 6.25 to 3.125 BTC per block. No decision by any company or central bank was needed.

Why it matters

With each halving, the rate at which Bitcoin’s supply grows slows down. This mechanism is tied to the cap of roughly 21 million bitcoin. The total amount isn’t cut in half; fewer new coins are simply added.

For miners, the change directly affects their revenue from issuing new coins. With the same machine and similar power consumption, they now get fewer new BTC per block. Their profitability also depends on Bitcoin’s price, fees, energy costs and competition.

What to watch out for

The most common misconception is that the halving guarantees a price rise. We separate the network’s rule from market expectations: the smaller new issuance is a given; future demand is not. The price is also affected by many other factors.

If you hold bitcoin, you don’t need to do anything for the halving. Your balance isn’t halved or doubled. Also, not every cryptocurrency has a halving: each network follows its own issuance rules.