Bitcoin Halving – A Beginner’s Guide
What is the Bitcoin halving? What does it mean? When does it happen? What happens to the value of Bitcoin when it does happen? In this post, I’ll answer these questions and more.
Bitcoin Halving Summary
The Bitcoin halving is a fundamental event in the Bitcoin network that occurs approximately every four years, or every 210,000 blocks mined. During this event, the reward that Bitcoin miners receive for verifying and adding new transactions to the blockchain, the block reward, is reduced by 50%. Satoshi Nakamoto, Bitcoin’s creator, programmed this halving process into Bitcoin’s code to control the rate at which new Bitcoin is introduced into circulation and to mimic the scarcity of precious metals like gold.
Why Does The Bitcoin Halving Matter?
Bitcoin has a fixed total supply of 21 million coins, meaning that no more than 21 million Bitcoin will ever exist. Unlike traditional currencies that central banks can print in unlimited quantities, Bitcoin’s supply is tightly controlled by the halving mechanism. This ensures that over time, new Bitcoin becomes more scarce, reducing the rate at which new coins enter circulation. This scarcity is a key reason many compare Bitcoin to digital gold.
How Bitcoin Historically Reacts to Halving
Bitcoin halvings have always been followed by significant bull markets, with prices surging in the months after each event. While the halving itself doesn’t immediately trigger a price jump, history shows that within 6 to 18 months, Bitcoin enters a parabolic uptrend. This pattern has repeated in recent halvings:
- 2012 Halving: Bitcoin was around $12, and within a year, it skyrocketed to $1,100.
- 2016 Halving: Bitcoin hovered around $650, then surged to $20,000 in late 2017.
- 2020 Halving: Bitcoin was near $8,500, and within a year, it reached $64,000, later peaking at $69,000 in 2021.
This recurring post-halving price surge suggests that Bitcoin’s supply reduction plays a key role in its market cycles. Since new supply is cut in half, the selling pressure from miners weakens, and as demand remains steady or increases, prices climb higher.
Bitcoin’s 4-Year Cycles and the Halving Effect
Many investors view Bitcoin as following a predictable 4-year cycle, directly linked to the halving schedule. Each cycle consists of four key phases:
- Accumulation (Pre-Halving Year): Investors accumulate Bitcoin in anticipation of the next halving.
- Parabolic Bull Run (Post-Halving Year): Historically, Bitcoin reaches new all-time highs 6-18 months after the halving as demand outpaces new supply.
- Market Peak & Euphoria: Once Bitcoin hits a euphoric stage, massive speculation drives prices to unsustainable levels, followed by a sharp correction.
- Bear Market & Bottoming Phase: After the cycle peak, Bitcoin typically undergoes a prolonged downturn, setting the stage for the next accumulation phase.
This predictable rhythm is why many long-term investors believe that Bitcoin will surge again following the next halving, as the supply shock plays out and market momentum builds. If history repeats, 2025 could be another explosive year for Bitcoin and the crypto market.
That’s the Bitcoin halving in a nutshell. If you want a more detailed explanation of halving, keep on reading. Here’s what I’ll cover:
What is the Bitcoin Halving?
To understand the Bitcoin halving, you must first understand the basics of Bitcoin mining. In short, new Bitcoin comes into the world as a reward for miners whenever they mine a Bitcoin block.
When Satoshi Nakamoto set up the rules for the Bitcoin protocol, he stated two important things, among others:
- First, the supply of Bitcoin is finite and limited to 21 million.
- Second, the number of Bitcoin generated per block i.e., the reward, is set to decrease by 50% every 210,000 blocks.
Why should we even have a halving event?
Why not keep the reward the same? Why the change? Isn’t that unfair to the miners? The answer to these questions lies in the law of supply and demand.
If the coins are created too quickly, or there’s no end to the number of bitcoins that can be created, eventually, there will be so many bitcoins in circulation that they will have very little value.
Vitalik Buterin, the lead developer of the Ethereum project, wrote an op-ed piece for Bitcoin Magazine and explained the need for slowing the distribution of bitcoins by halving this way:
“The main reason why this is done is to keep inflation under control.
One of the major faults of traditional, “fiat”, currencies controlled by central banks is that the banks can print as much of the currency as they want, and if they print too much, the laws of supply and demand ensure that the value of the currency starts dropping quickly.
Bitcoin, on the other hand, is intended to simulate a commodity, like gold. There is only a limited amount of gold in the world, and with every gram of gold that is mined, the gold that still remains becomes harder and harder to extract.
As a result of this limited supply, gold has maintained its value as an international medium of exchange and store of value for over six thousand years, and the hope is that Bitcoin will do the same.”
How long does it take for Bitcoin to be halved?
Since 6 blocks are mined on average within an hour (~ every 10 minutes each) and halving happens once every 210,000 blocks, there will be a halving event every 4 years (give or take).
This means that the mining reward will be reduced by 50% from before the halving. For example, if each miner receives 3.125 bitcoins for solving a block today, they will receive only 1.5625 bitcoins after the next halving event.
Of course, the fact that 21 million is the maximum amount of Bitcoin that will ever be generated doesn’t mean that there are actually 21 million bitcoins set to be in circulation. We need to consider that there are many lost bitcoins that will never be recovered (it’s assumed that up to 30% of Bitcoin’s supply, or 6 million BTC, is permanently lost).
James Howells from the UK reportedly lost 8,000 Bitcoin on a hard drive that’s in a landfill. He’s been battling with the government for 10 years to be allowed to search for it. He’s now wanting to use an AI-powered conveyor belt to help search through the garbage.
When were the previous Bitcoin halving events?
There have been three Bitcoin halving events, with the fourth event expected in April 2024.
- The first halving event occurred on November 28, 2012 (UTC) at a block height of 210,000.
- The second halving event occurred on July 9, 2016 (UTC) at a block height of 420,000.
- The third halving event occurred on May 11, 2020 (UTC) at a block height of 630,000.
- The fourth halving event occurred on April 19, 2024 (UTC) at a block height of 840,000.
When is the Next Bitcoin Halving?
Since we know the average block generation time (~10 minutes), we can estimate that the next halving event should occur sometime near April of 2028.
There are some websites that offer a countdown to the next halving that may be more accurate.
Will the Halving Impact Bitcoin’s Price?
Of course, the main question people want to know is, “Will the halving affect Bitcoin’s price?” And the answer is – nobody knows.
But let’s look at the previous three Bitcoin halvings and what happened after each event.
On November 28, 2012, the first Bitcoin halving occurred when block 210,000 was mined. At the time, Bitcoin’s price was $13.42, and the halving didn’t seem to affect the price much. Indeed, Bitcoin’s price spiked to $230 shortly after, but many attribute that to the Cyprus bailout.
In 2016, a week after the second halving event on July 9, not much happened to the trading price of Bitcoin. While it was trading at around $650 at the time of the event, a week later, the price was about $675, so not much of a change, not right away, at least.
The third and most recent Bitcoin halving event occurred on May 11, 2020. On the day of the halving, Bitcoin was trading at over $8,500. For the following six months, it remained somewhat steady between $9,000 and $13,000. Then, in October 2020, the price took off, reaching a then-all-time high of over $60,000 six months later in April 2021.
Studying this history and anticipating future halvings, there are arguments in favor of two scenarios – either the price will rise, or nothing will change.
Some community members and theorists claim that the halving event is well-known and will not surprise anyone or cause a major change in Bitcoin’s price.
Others claim that because the supply of Bitcoin is limited, the price is bound to climb as demand increases. However, no one seems to think that the halving may lower the price of Bitcoin in any way. In fact, the price of Bitcoin has never plummeted or crashed following any halving event.
Conclusion: Recapping the Bitcoin Halving
Bitcoin was designed with a fundamental principle in mind: scarcity drives value. To ensure this, Satoshi Nakamoto implemented a strict supply limit of 21 million bitcoins, preventing any central authority from inflating the supply.
The Bitcoin halving plays a crucial role in this system by gradually reducing the rate at which new bitcoins enter circulation, mimicking the scarcity dynamics of precious metals like gold. This programmed supply shock has historically influenced Bitcoin’s price cycles, contributing to its reputation as “digital gold.”
It is this predetermined supply schedule programmed by Satoshi Nakamoto that separates Bitcoin from so many other currencies before it. It is also one of the biggest separating factors between Bitcoin and the many other cryptocurrencies that exist today. This incorruptible, unchangeable supply schedule is what attracts so many towards Bitcoin and away from over-printed, centralized fiat currencies.
Understanding the Bitcoin halving helps to explain why Bitcoin is more than just another digital asset—it’s a decentralized, deflationary store of value. Whether you see it as an investment, a hedge against inflation, or the future of money, halvings remain one of the most critical mechanisms supporting Bitcoin’s long-term value proposition.
Bitcoin Halving FAQs
What year will the last Bitcoin be mined?
Will Bitcoin mining ever end?
How many bitcoins are mined per day?
Does Bitcoin halving increase price?
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