What is Block Halving in Bitcoin?

Block halving is a process in the Bitcoin network that reduces the reward for mining new blocks by half, occurring approximately every four years. Initially, miners received 50 Bitcoins for each block they mined. This reward halves every 210,000 blocks, a cycle that continues until the reward per block reaches zero, which is expected to happen around the year 2140. Currently, the reward stands at 6.25 Bitcoins per block and will fall to 3.125 Bitcoins after the next halving event.

Why was this done?

Purpose of Block Halving Bitcoin is designed to be a deflationary currency, meaning its supply will gradually decrease over time, akin to precious metals like gold. This decreasing supply, coupled with potential rising demand, positions Bitcoin as a potential safeguard against inflation, potentially increasing in value over time. In contrast, fiat currencies such as the US dollar tend to lose purchasing power due to inflation, which is the increase in monetary supply. An example of this is the rise in housing prices over the decades, which reflects the decrease in purchasing power.

Predictable monetary supply

Controlled Monetary Supply Bitcoin’s supply schedule is predetermined, allowing for precise predictions of its inflation rate over time. This predictability is valuable for understanding the current and future inflation rates of Bitcoin, as well as knowing the total number of Bitcoins currently in circulation and the amount yet to be mined.

Who Determines Bitcoin’s Supply?

The issuance of Bitcoin is governed by the network itself, which operates on a set of rules agreed upon by all participants since its inception:

• A maximum limit of 21 million Bitcoins to be created.
• Aiming for 10-minute intervals between the creation of each block.
• A halving event every 210,000 blocks, roughly every four years.
• Starting block reward of 50 Bitcoins, halving at each subsequent event until it zeroes out around the year 2140.

Any modifications to these foundational rules would require a collective agreement, a consensus from all network participants.

Historical Halving Events

• The inaugural halving event took place on November 28, 2012, at block 210,000.
• The second event was on July 9, 2016, at block 420,000.
• The third occurred on May 11, 2020, at block 630,000.

Price Trends Surrounding Halving Events The impact of halving on Bitcoin’s price is a subject of much speculation. Some argue that market anticipation of the halving means its effects are already reflected in the price, leading to no significant change. Others contend that a reduction in supply, assuming steady or increased demand, should naturally lead to a price increase. The following chart illustrates the price trajectory of Bitcoin during the previous three halving events:

Stats 

Total Bitcoins in circulation:	19,463,413
Total Bitcoins to ever be produced:	21,000,000
Percentage of total Bitcoins mined:	92.68%
Total Bitcoins left to mine:	1,536,588
Total Bitcoins left to mine until next blockhalf:	224,088
Bitcoin price (USD):	$26,121.00
Market capitalization (USD):	$508,403,797,912.50
Bitcoins generated per day:	900
Bitcoin inflation rate per annum:	1.70%
Bitcoin inflation rate per annum at next block halving event:	0.84%
Bitcoin inflation per day (USD):	$23,508,900
Bitcoin inflation until next blockhalf event based on current price (USD):	$5,853,389,588
Bitcoin block reward (USD):	$163,256.25
Total blocks:	804,146
Blocks until mining reward is halved:	35,854
Total number of block reward halvings:	3
Approximate block generation time:	10.00 minutes
Approximate blocks generated per day:	144
Difficulty:	52,391,178,981,379
Hash rate:	376.54 Exahashes/s
Current activated soft forks	bip34,bip66,bip65,csv,segwit,taproot
Current pending soft forks
Next retarget period block height	804384
Blocks to mine until next difficulty retarget	238
Next difficulty retarget ETA	1 days, 15 hours, 39 minutes