The source code for the Bitcoin protocol, originally written by Satoshi Nakamoto, governs the supply of new BTC. The only way new BTC can be created is through mining rewards, which will be cut by half every 210,000 blocks (or approximately every four years based on an average block time of 10 minutes). After 64 of these halving events, no more new BTC will be issued.
These rules effectively cap the supply of BTC at 21 million, with the rate of issuance slowing over time. At the time of the Bitcoin genesis block on January 3, 2009, the mining reward was set at 50 BTC. The table below shows an overview of the first five halvings.
Halving number | Block height | Date of halving | New block reward |
1 | 210,000 | November 28, 2012 | 25 |
2 | 420,000 | July 9, 2016 | 12.5 |
3 | 630,000 | May 11, 2020 | 6.25 |
4 | 840,000 | 2024 (anticipated in April*) | 3.125 |
5 | 1,050,000 | Due in 2028 | 1.5625 |
etc | etc |
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*Based on the current mining rate for new blocks, the fourth Bitcoin halving will happen in late April 2024 when the block height reaches 840,000 blocks. However, the date may be variable since it depends on network factors such as hash rate, which can affect the exact block production time.
Thereafter, there will be a halving approximately every four years, until there has been a total of 64 halvings.
What happens when there are no BTC left to mine?
Currently, miners earn a reward consisting of these newly minted bitcoins in addition to transaction fees paid by users. By the year 2140, following the 64th halving, there will be no new BTC left to mine, meaning that the whole reward will consist of transaction fees. The implications for the Bitcoin network cannot be known for certain. After all, miners participate in Bitcoin mining for rewards, and miners also play a vital role in securing the Bitcoin network through the proof-of-work consensus. Consequently, a lack of newly issued BTC may have adverse implications for the network’s security.
However, assuming there is still demand for Bitcoin by that time, then it’s plausible that users will be prepared to pay increased transaction fees to offset block reward decreases. In this scenario, mining could remain profitable and attractive enough to incentivize miners to keep the network secure.
Why does Bitcoin undergo halvings?
The most straightforward explanation for the halving is that it makes Bitcoin an asset with a disinflationary supply. The halving leverages the economic principles of supply and demand, assuming that over time, more people will become aware of Bitcoin, so demand will go up. At the same time, the slowing rate of supply will push prices up since there are fewer new BTC being minted to meet the demand.
While halvings are correlated with a rising BTC price (explored below), it’s not clear whether market forces were the primary driver for Satoshi’s making Bitcoin a deflationary asset. Satoshi coded a message into the Bitcoin genesis block, which reads “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” referring to the news headline and events of the day.
We can only speculate on Satoshi’s intentions based on clues left in communications and the Bitcoin white paper, but it’s reasonable to assume that Bitcoin was designed to exclude the possibility of supply manipulation and its potential impact on inflation.
Halving impact on BTC price
It’s impossible to say with any certainty that Bitcoin’s halvings impact on its price. However, based on historical price movements, many analysts believe that the halvings are linked to four-year cycles that influence the market value of BTC.
The table below shows an overview of BTC price movements throughout the previous three halvings cycles.
Halving period | BTC $ at halving | BTC $ at cycle high | Date of cycle high | % increase |
Nov 2012–Jul 2016 | $12.40 | $1,127 | November 30, 2013 | 8,988% |
Jul 2016–May 2020 | $653 | $19,665 | December 16, 2017 | 2,911% |
May 2020–April 2024* | $8,752 | $69,044 | November 10, 2021 | 689% |
*The cycle high is correct as of the time of publication in December 2023.
**Prices based on Coingecko
The dramatic increases in price between halvings and cycle highs may be diminishing, but the historical patterns are enough to provoke significant excitement about the potential impact of the next halving on BTC prices.
Why don’t all cryptos have halvings?
Some cryptocurrencies, particularly older proof-of-work currencies like Litecoin or currencies forked from Bitcoin like Bitcoin Cash, undergo their own halvings. However, a halving is now only one of many economic levers that blockchain developers can use to create inflation or deflation in their tokens.
For example, Ethereum’s London hard fork in August 2021 changed the fee model to burn a portion of gas fees, thus introducing a brand-new mechanism where supply inflation or deflation is affected by gas fee levels which fundamentally changed the overall ETH economic model. Other projects may mint new currencies without a cap on supply, operate burning events to reduce supply or introduce other mechanisms designed to control inflation.
The many variables involved with tokenomics are just one of the reasons why token holders should thoroughly investigate a project prior to buying any tokens.
Halving parties
Halvings are an important event in the cryptocurrency calendar. Like Bitcoin Pizza Day, many Bitcoin communities choose to mark the occasion with online or in-person “halving parties” where there is typically a countdown to the moment of the halving.
Find parties by searching on Google or Reddit or by looking for hashtags like #halvingparty or #halvingcountdown on social media.
Bitcoin halving essentials
- A Bitcoin halving takes place every four years, reducing the supply of newly minted BTC paid in mining rewards by half.
- Halvings are hard-coded into the Bitcoin software as a way of controlling inflation.
- The historical impact of halvings on BTC prices leads to significant excitement about the start of a new price cycle.