What is Bitcoin halving?
The halving (or "halvening") is an event programmed into Bitcoin's source code that cuts in half the reward paid to miners for each validated block. It occurs every 210,000 blocks — approximately every 4 years. The halving is one of the fundamental mechanisms that makes Bitcoin deflationary by design.
The mining reward mechanism
Miners — operators who dedicate computing power to validate Bitcoin transactions — receive a reward in new bitcoins for each block they add to the blockchain. This reward started at 50 BTC per block in 2009 and is halved at each halving.
After the fourth halving in April 2024, the reward is 3.125 BTC per block. The network thus produces approximately 450 new bitcoins per day — an annual inflation rate of 0.85%, lower than gold. Eventually, around 2140, the reward will be so close to zero that miners will be compensated solely by transaction fees.
The 4 halvings and their context
First halving — November 2012: reward from 50 to 25 BTC. Price at halving: $12. Bitcoin was virtually unknown to the general public. The price reached approximately $1,100 about 12 months later.
Second halving — July 2016: reward from 25 to 12.5 BTC. Price: $650. Bitcoin was beginning to attract institutional attention. The price reached $20,000 approximately 18 months later.
Third halving — May 2020: reward from 12.5 to 6.25 BTC. Price: $8,600. Context of pandemic and massive monetary injection. The price reached $69,000 approximately 18 months later.
Fourth halving — April 2024: reward from 6.25 to 3.125 BTC. Price: $64,800. First halving with active spot ETFs. Bitcoin had already set an all-time high of $73,700 before the halving — a first in history.
The shock to miners
Each halving immediately reduces miner revenue by 50% in BTC. The least efficient miners — those whose production cost exceeds the market price — shut down their machines, causing a temporary decline in hashrate (total network computing power). The network automatically adjusts via the difficulty mechanism — if hashrate falls, mining difficulty also falls to maintain a block time of approximately 10 minutes.
What the halving does not guarantee
The correlation between halving and price appreciation is real in historical data, but direct causality is debated. The halving reduces new supply but does not create demand. The three post-halving cycles unfolded in very different macro contexts (2013: Bitcoin internet, 2017: ICO boom, 2020-2021: massive QE). The fourth cycle incorporates for the first time the ETF variable, making any historical extrapolation partial.