Bitcoin Halving: What Is It, Halving Dates, & Importance

What Is Bitcoin Halving?

Bitcoin halving is when a new BTC minting is cut in half according to a predetermined schedule. This halving is key to the infrastructure and monetary policy of Bitcoin, and is intended to reduce supply.  Every four years when the reward is reduced by 50%, the number of new coins going into the cryptocurrency’s ecosystem is reduced. 

Bitcoin’s Total Supply Is Driven By “The Halving”

“The halving” — also referred to as “the halvening” — is a popular term used to describe the event that triggers a change in Bitcoin’s emissions schedule. This is when the pace of new bitcoin (BTC) creation is cut in half on the Bitcoin blockchain. In order to understand what this means, it’s important to review how Bitcoin validates transactions and issues new BTC.

The Bitcoin network’s Proof-of-Work (PoW) consensus mechanism relies on a network of miners (i.e. network validators) that use specialized hardware to solve complex mathematical equations in the form of cryptographic hashes. Every block of transactions on the Bitcoin network generates a unique mathematical equation that must be solved in order for that block to be validated and recorded on Bitcoin’s blockchain ledger. Therefore, the process of solving these equations underpins the entire network’s operational efficiency and security.

Each consecutive Bitcoin block created on the Bitcoin network generates an incrementally more complex equation for miners to solve, which makes this form of PoW consensus require considerable computational power. As a result, miners need to be incentivized to participate in this process, meaning that every time a miner successfully solves a block’s mathematical equation before their peers and produces a 64-character hash “transaction signature” that is added to the ledger, the miner is rewarded with newly minted BTC.

This process of mining BTC is the only way new BTC can be minted (issued) into existence. It’s important to recall that bitcoin was designed to be a deflationary cryptocurrency with a capped total supply, and its crypto halving schedule is the primary mechanism through which this deliberate supply restriction is achieved. After every 210,000 blocks mined on the Bitcoin network, the number of new bitcoin that miners receive for each successfully mined block is permanently reduced by 50%.

Historical Timeline for Bitcoin Halvings

Let’s take a look at Bitcoin halving history in a snapshot to fully appreciate the progression of Bitcoin and the impact halving has had. 

• When the Bitcoin network first launched, miners earned 50 BTC per block.

• The first Bitcoin halving in 2012 reduced the block reward to 25 BTC per block. 

• The 2016 halving event cut rewards to 12.5 BTC per block mined.

• In May 2020, the BTC halving again slashed this number reducing it down to only 6.25 new BTC per new block mined.

• The last Bitcoin halving occurred on April 19, 2024 — bringing a block reward down to just 3.125 BTC.

To recap, these digital assets have been dramatically changed in a relatively short period of time. The timeline above shows the impact of a Bitcoin halving event, and how this digital asset has continually decreased in supply, as it was intended. 

Bitcoin halving countdowns are tied to Bitcoin’s block count, rather than an external timeline. For this reason, the specific dates when future Bitcoin halvings take place cannot be accurately predicted in advance. Even though Bitcoin halvings aren’t tied to a fixed date on the calendar, projections can be made on the timing of the next Bitcoin halving. This is based on past performance, in addition to expert insight.  That being said, historically it has taken roughly four years to complete each 210,000-block cycle. Although this timeline is not set in stone for all future halvings, we do know that the next BTC halving is expected to happen March 26, 2028. This process will continue until all 21 million BTC are mined, meaning that the pace of Bitcoin’s supply growth will continually decrease over time.

Most Bitcoin halving charts show the last fractions of BTC being mined sometime in 2140, and at that point, miners are expected to be rewarded solely with user transaction fees. This strategy is in place to ensure that miners still have an incentive to keep the network running. 

Why Does a Bitcoin Halving Exist?

Bitcoin’s deflationary design is central to the cryptocurrency’s appeal. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, was opposed to central bank digital currencies and payment networks. This is precisely why he set out to create a digital currency with a finite, algorithmically enforced market supply. Bitcoin’s mining process and reward system enables a decentralized way to validate and execute transactions. This structure ensures that the supply of Bitcoin is hard-coded to be both predictable and deflationary. Outside of Bitcoin, other cryptocurrencies such as Litecoin follow crypto halving schedules of their own in a similar fashion. 

It’s worth noting that not all cryptocurrencies are deflationary or adhere to a consistent supply growth curve. That being said, every serious blockchain project takes a thoughtful approach to its cryptoeconomic structure.

What Happens After Each Bitcoin Halving?

The most immediate effects of the halving are a reduction in Bitcoin miner profitability and a slowdown in the rate of BTC’s total supply growth. These outcomes are effectively two sides of the same coin, since the BTC rewards miners for each successfully mined block, and this is the means through which Bitcoin’s total and circulating supply increases. 

Since the reduction in mining rewards occurs immediately after each 210,000-block cycle, it triggers an instantaneous drop in miner revenue post-halving. As a result, the number of Bitcoin miners will likely continue to drop as the economic rewards for mining become less attractive, and smaller, less efficient miners are unable to generate a profit through bitcoin mining.

Does Bitcoin Halving Increase Pricing?

Past Bitcoin halving dates have been followed by a period of price volatility for Bitcoin and the overall crypto market. Historically, Bitcoin halving has resulted in excitement and price increases for the digital asset, similar to a bull run in the traditional stock market. 

Just like the stock market, Bitcoin's historical performance does not always predict future results, and it remains to be seen how future BTC halvings will impact price movements. Other factors in determining the price of Bitcoin is the potential adoption of other crypto projects beyond Bitcoin, as institutional crypto investors leave larger footprints within the cryptosphere. We already know that Bitcoin has much more volatility than other asset classes, including the stock market — but how are Bitcoin and other cryptocurrencies impacted by inflation? 

What To Know About Bitcoin Halving and Inflation

We’re all familiar with inflation and how it impacts the economy and our wallets. So, does Bitcoin experience inflation like other asset classes? The short answer is yes — even though Bitcoin is designed to be a deflationary digital asset. However, there’s more to the story. Bitcoin has been compared to gold for its similarities as an asset class when it comes to inflation. Gold is thought to be inflation-resistant, and Bitcoin was actually designed with this same attribute in mind. When more Bitcoin is mined and the number of coins is continually reduced from the original 21 million coins, Bitcoin's inflation rate will decrease. The supply is decreased and the demand goes up — and, like other assets, this scenario increases Bitcoin’s value over time. This increases purchasing power, hence the strategy as a stable coin in the cryptocurrency marketplace. 

Should You Invest in Bitcoin Before or After a Halving? 

You have likely heard people say not to try to time the stock market, but does this same logic apply to Bitcoin investing? Bitcoin is different from the stock market in that there is a known event every four years, which also has some predictability. Reviewing the historical performance surrounding the time period of these halving events, BTC prices have consistently gone up following a halving event. The reason is simple — Bitcoin halving reduces the number of coins available. 

When a commodity becomes less abundant, the price increases due to the concept of supply and demand. No one knows for certain whether this trend will continue, but many Bitcoin enthusiasts and institutional investors believe that future halvings will continue to drive demand. Each investor must determine his or her own risk tolerance for investing in Bitcoin, or any asset class for that matter.

Predictable Crypto Halvings in an Uncertain World

Early 2022 saw the 19 millionth bitcoin (BTC) mined into existence, leaving just 2 million left to be released as mining rewards. It’s fitting that the May 2020 Bitcoin halving occurred during a period of significant monetary inflation, with the U.S. and other countries printing trillions of dollars’ worth of fiat currencies. This occurred in order to stave off the economic crises related to COVID-19 lockdowns. 

It remains to be seen whether these crypto halvings will allow Bitcoin to live up to Satoshi Nakamoto’s vision of a truly accessible, globally adopted digital currency. The only thing certain is the past performance we have seen from this digital asset, and the BTC halving is a key component of Bitcoin’s success to date. There has been plenty of volatility throughout Bitcoin’s existence, and it’s important to acknowledge that no investments come without risk. One thing is for sure — Bitcoin halvings have been a steady, algorithmically-ensured event since Bitcoin’s inception, which has thus far caused an uptick in adoption from retail investors and institutional investors alike.