One of the most pivotal events on Bitcoin’s blockchain is a halving, when the reward for mining is cut in half. As of 2023, network participants who validate transactions are awarded 6.25 bitcoins (BTC) for each block successfully mined.
The next halving is expected to occur in April or May 2024, when the block reward will fall to 3.125. Over time, the impact of each halving will diminish as the block reward approaches zero.
What Is Bitcoin Halving?
After the network mines 210,000 blocks—roughly every four years—the block reward given to Bitcoin miners for processing transactions is cut in half. This event is called halving because it cuts the rate at which new bitcoins are released into circulation in half.
This rewards system will continue until about 2140, when the proposed limit of 21 million coins is reached. At that point, miners will be rewarded with fees for processing transactions, which network users will pay. These fees ensure miners are still incentivized to participate and keep the network going.
The halving event is significant because it marks another drop in the rate of new Bitcoins being produced as it approaches its finite supply. In 2009, the reward for each block in the chain mined was 50 bitcoins. As of April 2023, about 19.3 million bitcoins were in circulation, leaving just around 1.68 million left to be released via mining rewards.
5
When Did the Bitcoin Halvings Happen?
There have been three halvings as of April 2023:
- Nov. 28, 2012, to 25 bitcoins
- July 9, 2016, to 12.5 bitcoins
- May 11, 2020, to 6.25 bitcoins
Why Are the Halvings Occurring Less Than Every 4 Years?
The Bitcoin mining algorithm is set with a target of finding new blocks once every 10 minutes. Some blocks take more than 10 minutes; some take less. This can decrease or increase the amount of time it takes to reach the next halving goal. For example, if blocks consecutively average 9.66 minutes to mine, it would take about 1,409 days to mine the 210,000 blocks required (four years is 1461 days, including one day for a leap year).
What Happens When There Are No More Bitcoins Left?
It is often thought that in 2140, the last bitcoin will be mined. However, if the reward is halved every 210,000 blocks, there will always be a mining reward—assuming the blockchain still exists at that time. The reward will just get smaller and smaller every time there is a halving if the practice continues.
Why Are the Halvings Occurring Less Than Every 4 Years?
Bitcoin halving cuts the rate at which new bitcoins are released into circulation in half. The rewards system is expected to continue until the year 2140, when the proposed 21 million limit for bitcoin is reached.
In 2009, the reward for each block in the chain mined was 50 bitcoins. After the first halving, it was 25, and then 12.5, and then it became 6.25 bitcoins per block as of May 11, 2020.
Bitcoin halving has major implications for its network. For miners, the halving event may result in consolidation in their ranks as individual miners and small outfits drop out of the mining ecosystem or are taken over by larger players.
Reference: https://www.investopedia.com/bitcoin-halving-4843769
