What is Halving? Everything You Need to Know About Bitcoin Halving

The block reward received by Bitcoin miners, who validate Bitcoin transactions using mining hardware, and the block reward halving are among the most significant events in the cryptocurrency world. In this article, we will explore what Bitcoin halving is and why it is important.

What is Bitcoin Halving?

The reduction of new Bitcoin production, which occurs every 10 minutes, by half at certain intervals is defined as Halving. The reward halving repeats every 210,000 blocks and occurs approximately every four years.

What Is the Purpose of Halving?

Bitcoin halving helps to balance Bitcoin inflation.

Why Is Bitcoin Halving Important? Why Does Halving Occur in Bitcoin?

Satoshi Nakamoto set a cap of 21 million for the total supply of Bitcoin, effectively limiting its availability. Once 21 million Bitcoins have been mined, the production will come to a halt. Due to the halving process, which reduces mining rewards by half every four years, it is expected that all Bitcoins will be mined by the year 2140. After the total supply is reached, miners will only earn transaction fees included in the blocks rather than block rewards.

The block halving was designed by Satoshi Nakamoto to help balance Bitcoin’s inflation. As a result of the halving, the amount of Bitcoin produced decreases over time. This reduction in block rewards occurs independently of any negotiation, government intervention, or central authority decision, thanks to the decentralized nature of the Bitcoin network.

How Does the Bitcoin Halving Process Work?

Bitcoin blockchain undergoes a halving event every 210,000 blocks. The 4th halving of Bitcoin occurred at block 840,000. From this point onward, until the next halving, miners will earn 3,125 BTC for each new block they find.

What Happens When BTC Halving Occurs?

When Bitcoin halving occurs, the reward that miners receive for each block they mine is halved.

Bitcoin Halving Events and Dates

Bitcoin’s block reward halves every 210,000 blocks, occurring approximately every 4 years. The first Bitcoin block was mined by Satoshi Nakamoto in 2009. The first halving took place on November 28, 2012, reducing the block reward from 50 BTC to 25 BTC, while the price of Bitcoin reached $12.35. The second halving occurred on July 9, 2016, further reducing the block reward from 25 BTC to 12.5 BTC. At that time, Bitcoin’s price reached $650.63. The third Bitcoin block reward halving occurred in May 2020, reducing the reward from 12.5 BTC to 6.25 BTC. The most recent halving occurred in April 2024, where the block reward was further reduced from 6.25 BTC to 3.125 BTC.

The Bitcoin block reward halving will continue to occur every 210,000 blocks until the total Bitcoin supply reaches 21 million.

How Often Does Bitcoin Halving Occur?

Bitcoin Block Reward Halving occurs every 210,000 blocks, which corresponds to approximately a 4-year period.

Blocks that Form the Bitcoin Blockchain and Bitcoin Mining

The blockchain is a decentralized database where data is stored in immutable blocks and continuously grows over time. The blocks that make up the blockchain contain datasets of transaction and verification records from transfers made on the network, which are both encrypted and publicly accessible. Each block on the Bitcoin blockchain is about 1 MB in size. However, with the SegWit upgrade, these blocks can be expanded up to 4 MB. The connection of each block to the previous one, which includes part of the preceding block, creates a chain of blocks, thus giving rise to the term “blockchain.”

On January 3, 2009, Satoshi Nakamoto created the first block of the Bitcoin blockchain, known as the Genesis Block. This initial block served as the starting point, establishing a reference for the subsequent blocks to be linked together. For this reason, it is also referred to as “Block 0.”

The process of verifying Bitcoin blocks and adding them to the blockchain using the processing power of devices is known as Bitcoin mining. Bitcoin miners are individuals who operate these devices to generate Bitcoin. The costs for Bitcoin miners, including hardware acquisition, operation, electricity, and other expenses, can be quite high. The Bitcoin network offers block rewards to ensure continuous transaction verification and to incentivize miners. The first miner to validate a Bitcoin block earns the transaction fees for the transactions within the block, as well as the block reward. Miners earn profits from the blocks they validate, although the revenue from these blocks can vary.