What is a Bitcoin Halving?

The beginner’s guide to halvings ✂️ 

A Bitcoin halving is an event that automatically reduces the number of new bitcoin (BTC) units that enter into circulation over time via the crypto mining process.

This process takes place approximately once every four years and progressively cuts the issuance rate of newly-minted bitcoin by 50% each time.

Unlike traditional fiat currencies, where centralized authorities can adjust the monetary supply at will, Bitcoin has a truly finite maximum supply and a fully transparent, programmatically-controlled issuance schedule.

This has led some people to regard bitcoin (BTC) as a potential store of value asset, particularly in regions where government-issued currencies have collapsed.

Once the protocol hits this number, no more bitcoin can be mined.

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Bitcoin halvings explained 🧑‍🏫

Bitcoin’s clearly defined and fixed inflation rate is what separates Bitcoin from government issued currencies.

While governments constantly adjust their inflation rate to account for economic factors, Bitcoin operates in an unchangeable way.

Satoshi Nakamoto, the project's pseudonymous creator and author of the Bitcoin white paper, programmed halvings into the protocol prior to its launch in 2009.

bitcoin halving image

When was the most recent bitcoin halving? ⏲️

The most recent halving was April 20, 2024 at 00:09 UTC.

At that time, the bitcoin protocol automatically reduced the amount of bitcoin entering circulation as a mining reward from 6.25 BTC to 3.125 BTC per block.

This bitcoin block reward rate will remain at 3.125 BTC until the next halving takes place — 210,000 blocks later. 

btcBitcoin Price


When is the next bitcoin halving? ⏲️

The next halving is expected to take place in April 2028.

With that 2028 halving, the block reward will automatically halve again from 3.125 BTC to 1.5625 BTC per block, until the next 210,000 blocks of transactions are added to the chain.

Bitcoin halvings are an important part of how the bitcoin protocols operates. They help ensure that the amount of Bitcoin entering circulation overtime gradually reduces.

Many feel this is an important part of what makes bitcoin scarce and ultimately what helps give bitcoin value.

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How is bitcoin different from “normal” money? 🧐

To best understand halvings, it's helpful to first understand how bitcoin is different to government-issued currencies like the U.S. dollar.

The monetary policies that govern government-issued national currencies are subject to change based on the discretion of a central authority. These are often a country's central bank or government. Monetary policy is the way by which a central bank controls the amount of money that exists within the economy.

Using monetary policy, governments can modify their money supply by creating units of currency as they see fit. To avoid defaulting on their debts, governments have often chosen to increase their money supply. Increasing the money supply allows governments to use newly created currency to fulfill their past debt obligations.

The process of creating new units of currency (increasing the money supply) is said to debase the currency. Debasement refers to a reduction in the amount of goods people can purchase with each unit of currency. In economics, this concept of how many goods can be purchased for a unit of currency is known as purchasing power.

Creating many new currency units and releasing them into circulation can also drive inflation. Inflation is an increase in the prices of goods and services across an economy.

So, how is bitcoin different?

Unlike fiat currencies, bitcoin is a fully decentralized and programmatically controlled financial protocol. No single government, central bank, or crypto holder can override the rules of bitcoin or decide for themselves how the protocol should operate.

New units of bitcoin are issued based on a fixed schedule that Bitcoin's anonymous creator, Satoshi Nakamoto, programmed into the protocol when it first launched.

These rules are hard-coded into bitcoin's source code and can only be changed with a majority consensus from all nodes on the network.

How are new bitcoin created? ⚙️

The Bitcoin blockchain uses a type of consensus mechanism called proof-of-work to select honest participants to propose new blocks and verify new bitcoin transactions. 

Known as "bitcoin mining," this process helps to both secure the bitcoin network and release newly minted BTC into circulation.

Bitcoin mining is a cryptography-based competition based on trial and error. It involves computer operators—known as miners—using purpose-built equipment and vast amounts of computing power.

Because of their similarities, mining bitcoin is often compared to mining precious metals like gold. Both involve a considerable amount of effort, specialized equipment and luck.

But in some ways, mining Bitcoin can be even more challenging than finding gold.

The mining process can be difficult to understand. Luckily, the Kraken Learn Center has created a dedicated article, What is Bitcoin mining? to explain how this process works.

How do bitcoin halvings work? 📝

Because Bitcoin is a decentralized and programmatically-controlled financial protocol, bitcoin halvings take place automatically via a computer program.

No single government, central bank or crypto holder can override Bitcoin’s computer-coded rules. Nor can they decide for themselves how the Bitcoin protocol should operate.

Satoshi crafted the rules of the halving mechanism to ensure Bitcoin's long-term feasibility and functionality. This choice ultimately left Bitcoin’s rules open for the community to change as they see fit, yet halvings have remained.

Because all proposed changes must receive consensus from all participants in the global Bitcoin network, changes rarely happen. In short, everyone’s generally happy with how the system works.

Currently, halvings events follow a strict set of parameters that have not changed since Satoshi first created them.

  • Halvings occur after every 210,000 blocks of transactions. It takes approximately four years to reach this amount of transactions.

  • The Bitcoin protocol automatically reduces the amount of newly-minted bitcoin distributed to winning miners as a block reward by 50%. Miners receive half as much block reward for the next halving cycle as they did from the previous 210,000 blocks.

  • Halving will continue until the circulating supply of BTC reaches the maximum supply limit of 21 million.

  • Once the number of bitcoin in circulation hits 21 million, the Bitcoin protocol will stop issuing new units in subsequent block rewards.

  • This moment is expected to take place some time near the year 2140.

  • After this time, miners will likely be forced to subsist on transaction fees alone for processing bitcoin payments.

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How do bitcoin halvings affect miners? 🔍

Only one miner can win each round of the bitcoin mining competition. This usually takes around 10 minutes, on average. Once a winner is found, the competition restarts.

Each time a miner wins, they gain the right to propose a new block of pending transactions to join the Bitcoin blockchain. As a reward, the winning miner receives something called a block reward.

Bitcoin block rewards comprise an amount of newly-minted bitcoin, plus any transaction fees the senders might have included.

This is how new units of bitcoin enter into circulation. Miners typically sell some bitcoin to cover their operating expenses and to secure profits. These coins end up in the secondary market, where other people have the opportunity to buy, trade and own them.

Every 210,000 blocks, the protocol automatically cuts the amount of BTC given to miners as a block reward by 50%. This is a big deal to miners, because they essentially have any potential profits they might make slashed in half. To compensate for this, miners constantly seek more efficient machines and/ or cheaper electricity to stay above break-even levels.

How do halvings affect bitcoin’s price? 📊

Looking back at historical price movements, dramatic price increases have followed after each halving event.

  • Halving #1: 9,520% rise over the following 365 days.

  • Halving #2: 3,402% rise over the following 518 days.

  • Halving #3: 652% rise over the following 335 days.

From this, the mean average time before prices peak after a halving is around 406 days.

Of course, past performance is no guarantee of future results, and while many believe halvings are the fundamental catalysts for these rallies we cannot know definitively if this is the case. 

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How many bitcoin halvings are left? ⏳

Of the 21 million bitcoin that will ever exist, just under 20 million are already in circulation.

It has been frequently estimated that the last bitcoin will enter into circulation in the year 2140.

If that is correct, it means that there should theoretically be at least 29 more halving events between now and then.

Next halving image

What happens when there's no more bitcoin left to mine? 🔮

It's impossible to know with any certainty how the Bitcoin market (or the world) will look in over a hundred years' time.

It's possible that protocol optimizations and new functionality may allow miners to survive comfortably on bitcoin transaction fees alone in the future. Rather than relying on block rewards to support their mining costs, they could be supported by the transaction fees people include to incentivize miners to process their transactions.

We have already seen how innovations such as Ordinals have caused BTC transaction fees to spike, allowing miners to earn more revenue from the blocks they discover.

Alternatively, humans may have discovered limitless clean energy by then and found new hyper-efficient ways to mine bitcoin with near-zero running costs.

Only time will tell.

Regardless, the end of block rewards does not mean an end to Bitcoin itself.

After all 21 million bitcoin that will ever exist enter circulation, the Bitcoin protocol will still allow people to store value and execute peer-to-peer payments.

Why are bitcoin halvings important? 🔑

Nakamoto implemented halvings on the Bitcoin network to control the inflation rate of its native cryptocurrency. Other digital currencies that have hard forked from Bitcoin such as Litecoin (LTC) continue to use this mechanism in their protocols also.

The Bitcoin halving process is completely different from the rate at which government-issued currency enters into circulation.

In fiat economies, supplies can dramatically increase (or decrease) at a moment's notice based on the decision of a central bank. In these instances, millions of new units of a currency may enter (or exit) the market whenever policy makers deem it necessary.

Bitcoin simply does not have the functionality to allow a single entity to change its issuance system.

Because of this, many see bitcoin as a more resilient, transparent and reliable form of money.

In addition, many argue that halvings have a positive effect on bitcoin's price dynamics. Based on the economic principle of supply and demand, halvings have the effect of shrinking the available supply of new bitcoin entering the market over time. Provided there is steady demand for the crypto asset, this mechanism may help to support future prices.

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Halvings represent one of bitcoin’s most exciting and innovative features.

Not only have they seemed to have repeated positive impacts on its market price, but their predictability and transparency are key factors that distinguish bitcoin from fiat currencies and all other types of assets.

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