Halving

A halving is a pre-programmed event in which the number of new coins paid to miners for each block is cut in half. It is best known from Bitcoin (BTC), where it happens every 210,000 blocks, roughly every four years, and is written into the software by its pseudonymous creator, Satoshi Nakamoto. Halvings slow the creation of new bitcoin until issuance stops altogether, which is how the total is held below 21 million.

The halving changes only the subsidy part of the block reward; the transaction fee income that miners also collect is unaffected. Other mineable coins copy the idea with their own intervals, while coins created all at once or issued by staking have no halving.

Imagine a gold mine that, by law, must reduce its output by half every four years. In the first years it produces plenty; later it trickles; eventually it closes. Everyone knows the schedule in advance, so nobody can decide to print extra gold to pay a bill.

Bitcoin works the same way. The reward for keeping the ledger running starts generous and shrinks on a timetable set at launch. The people doing the work, the miners, get paid less in new coins after each halving, so over time they rely more on the fees users pay to have their transactions included.

Each block has a number, its block height. The subsidy for any block can be worked out from that height alone:

• $S(h)$ is the subsidy in BTC for the block at height $h$.
• 50 is the original subsidy paid from the genesis block era onward.
• $\lfloor h / 210{,}000 \rfloor$ is the number of halvings that have already happened, rounded down to a whole number.

Worked example: for block 900,000, $900{,}000 \div 210{,}000 = 4.29$, which rounds down to 4. The subsidy is $50 \div 2^{4} = 50 \div 16 = 3.125$ BTC. In the software, amounts are counted in satoshis and halved by integer division, so fractions are dropped. After 33 halvings the subsidy falls below one satoshi and becomes zero, which on the current pace is expected around the year 2140. Summing every subsidy gives just under 21 million BTC, the basis of the 21 million bitcoins cap.

Because block times vary, halvings are tied to block numbers, not calendar dates. The mining difficulty adjustment keeps blocks near ten minutes apart, which is why the four-year rhythm holds fairly well.

The fourth halving block was mined by the ViaBTC pool at about 00:09 UTC on 20 April 2024, which was still the evening of 19 April in the Americas. The exact date of the fifth depends on how fast blocks arrive between now and then.

A halving cuts miners' subsidy income by half overnight. Operators with expensive power or older Application-Specific Integrated Circuit (ASIC) machines may become unprofitable and switch off, which can cause a temporary drop in hashrate until the next difficulty adjustment. Survivors tend to be those with cheap electricity and efficient hardware, and the halving cycle has encouraged consolidation among large listed mining companies.

Over the long run, the security of the network will depend on fees rather than subsidy. Whether fees will be high enough to pay for strong security once the subsidy is small is one of the most debated questions in Bitcoin's design.

Halvings make Bitcoin's token emission fall in steps, so the annual growth of its circulating supply declines with each cycle. This predictable, shrinking issuance is central to the argument that bitcoin can act as a store of value, in contrast with fiat currencies whose supply is managed by central banks and subject to inflation.

Prices have often risen in the months after past halvings, and that pattern is widely discussed in markets. However, a pattern drawn from four events is not proof of cause: halvings are announced years in advance, and price moves also reflect interest rates, regulation and wider demand for cryptocurrency. No halving guarantees any price outcome.

Litecoin (LTC) halves every 840,000 blocks, which also works out to about four years because its blocks arrive every two and a half minutes. Bitcoin forks such as Bitcoin Cash (BCH) inherited Bitcoin's schedule and halve at the same block heights. Some coins, including Monero, use a smooth declining curve followed by a small permanent "tail emission" rather than step halvings.

• Bitcoin Wiki: Controlled supply
• BIP 42: A finite monetary supply for Bitcoin