What is the Bitcoin halving?

The Bitcoin halving is an automatic control mechanism built into the Bitcoin protocol by its creator, Satoshi Nakamoto, to keep inflation in check. It happens every 210,000 blocks, roughly every four years, and cuts in half the number of new bitcoins created and awarded to miners for each successfully mined block. Learn more about Bitcoin.

Bitcoin halving: the effect on miners

Every time a new block is mined, the miner responsible for mining it receives a reward in bitcoins. This reward is made up of the fees from the transactions included in the block plus a fixed amount of new bitcoins created in the process. This amount of new bitcoins is called the "block reward".

When Bitcoin was created, the initial reward for each block was 50 bitcoins. The first halving took place in November 2012, cutting the reward to 25 bitcoins per block. The second halving, in 2016, cut the reward to 12.5 bitcoins, and the third, in 2020, to 6.25 bitcoins.

Bitcoin halving: the effect on supply and demand

The main goal of the Bitcoin halving is to control supply, ensuring the currency stays resistant to inflation. The gradual reduction in the issuance of new bitcoins means Bitcoin can't be debased the way a fiat currency can be through excessive money printing.

A history of Bitcoin halvings

Bitcoin halvings are critical milestones in Bitcoin's history, as they shape its supply and can have a direct effect on the coin's value. Several halvings have taken place since Bitcoin was created in 2009.

The first Bitcoin halving (2012)

The first Bitcoin halving took place on November 28, 2012, when the network reached 210,000 blocks. Before the halving, the reward for each block was 50 bitcoins. After the halving, the reward dropped to 25 bitcoins per block. This cut led to a rise in Bitcoin's value, as the reduced supply of new coins met increased demand.

The second Bitcoin halving (2016)

The second halving took place on July 9, 2016, with the block reward falling further from 25 to 12.5 bitcoins. Although the market didn't immediately respond with the same price rise as after the first halving, we did see a steady increase over the following months as the market adjusted to the new balance of supply and demand.

The third Bitcoin halving (2020)

The third halving took place on May 11, 2020, with the miners' reward falling further to 6.25 bitcoins per block. This halving came at a time when Bitcoin and other cryptocurrencies were gaining more liquidity and becoming more accessible to the general public. It was followed by a big price rise, which strengthened investor interest in Bitcoin as a "store of value."