Bitcoin Halving: What It Is, How It Works & Why It Matters (2024)

Athena Alpha

The next Bitcoin Halving is a few years away and is estimated to occur in 2028. Maybe you’ve seen posts about previous halvings and others getting excited and don’t really understand why. Well today we’re going to fully explain why it exists and why people celebrate it like it’s Christmas (hint: it usually makes everyone tons of money!)

What Is Bitcoin Halving?

The Bitcoin Halving (also called Bitcoin Halvening) is when the block subsidy that’s rewarded to Bitcoin miners is halved. Currently in the block subsidy is 3.125 BTC, but in 2028 it will reduce to 1.5625 BTC once the Bitcoin Blockchain hits a block height of 1,050,000.

The day of a Bitcoin halving is tracked and celebrated around the world by millions of Bitcoin users as it represents an event that only occurs once every 4 years. There have been three halving days so far, each one occurring after 210,000 blocks have been mined and this tradition will continue until an estimated 2140.

Bitcoin Halving Explained

One of the six key characteristics that makes any money (crypto or otherwise) a good money is scarcity. For example, salt is not scare. There is basically infinite salt in the world and so if a country used salt as their money then everyone would just go mine huge amounts of salt and use it to buy the whole country. As such, it’s not a very good money.

On the other hand, gold is quite scarce. There isn’t very much of it in the world and it’s very hard to mine for and find new gold. This makes it a good “hard” money as no one can easily get large amounts of it.

In order to ensure that Bitcoin had excellent scarcity Satoshi decided to put a hard cap on How Many Bitcoins could ever be created. That cap is 21 million bitcoins, but then they faced another problem, how should they be fairly distributed?


Why Does The Bitcoin Halving Happen?

The Bitcoin Halvings happen to help ensure a fair, automatic and even distribution of all 21 million bitcoins over time. As time goes on, the amount Bitcoin miners are paid halves every 210,000 blocks (roughly every 4 years).

This means that those who are involved in the network and help mine it earlier on are rewarded much more than those that come later. The reward can also be claimed by anyone, anywhere just by participating in Bitcoin mining which helps distribute the bitcoins far and wide.

Dive Deeper: What Is Bitcoin Mining?

New to Athena Alpha? Start today!

Why Does It Matter?

When creating a new network, one of the core problems is how to bootstrap it. That is, how do you get people to use it when it’s not actually that useful at the start. This is because the utility of a network like Bitcoin grows as more people use it. This is called the Network Effect.

For example, it’s not hard to convince someone to use the Internet now that there’s billions of people using it. However if there were only 5 random people using it… well it wouldn’t really be much fun would it! The Bitcoin halving helps to encourage people to become Bitcoin Miners earlier on as they get a much larger reward.

As each halving occurs, it also changes the amount of inflation in the Bitcoin ecosystem. Currently the Bitcoin money supply increases or inflates at a rate of around 0.8% p.a. That’s a lot better than the current inflation rates we’re seeing across the world with fiat currencies, but once the next halving hits it’ll be reduced even further to around 0.4%.

How Does The Bitcoin Halving Work?

The Bitcoin Halving works by automatically cutting the Block Subsidy amount in half after 210,000 blocks. This is done by the Bitcoin Core code that is run on all Bitcoin Full Nodes and there is nothing that holders of bitcoins need to do.

Bitcoin’s pseudonymous creator, Satoshi Nakamoto decided to fairly distribute the 21 million bitcoins by steadily rewarding it to Bitcoin Miners who help operate the network with the Block Reward.

The Block Reward is paid out to miners that successfully add a new, valid block to the Bitcoin Blockchain and is made up of two parts:

Block Reward = Block Subsidy + Transaction Fees.

The Block Subsidy is freshly minted bitcoins that are added to the network as part of the reward for miners doing Proof-of-Work (PoW). The transaction fees are just what people are paying to have their transactions included in the block and are already existing bitcoins.

When Bitcoin first started, the Block Subsidy was 50 BTC. Each time someone mined a new block, they would get all the transaction fees and the ability to spend 50 new bitcoins. As you can see, this is a huge incentive and a much bigger reward than what miners get now.

Bitcoin Halving Dates

Although we humans measure time with calendar days, dates and years, Bitcoin is a bit different. It measures time in blocks. One block is mined roughly every 10 minutes on average and so 210,000 blocks is about 4 years.

210,000 Blocks * 10 Minutes = 21,000,000 Minutes = 35,000 Hours = 3.9927 Years

While one block is mined on average every 10 minutes, it’s not always exactly every 10 minutes. As you can see below in this random selection of mined blocks, the first block was mined after 6 minutes, the second after 16 minutes and so on.

Bitcoin Blockchain Technology Mempool

This means that the next BTC halving date isn’t known until it happens. When block 1,050,000 is mined we’ll have the exact time and date for the 2028 Bitcoin halving, but until then we can only give a rough estimate.

When Is The Next Bitcoin Halving?

There have been four BTC halving dates so far with the next BTC halving date estimated to happen in 2028.

Historic & Future Bitcoin Halving

Below are the historic and future Bitcoin halvings. As you can see, they occur every 210,000 blocks and will continue until around 2140 which will be the last Bitcoin halving. After this, the Block Subsidy will be reduced to 0 and the Block Reward will be entirely made up of just transaction fees.

HalvingEraBlock HeightBlock SubsidyDate
20090 (Genesis Block)50.00000000 BTC3rd Jan, 2009
12012210,00025.00000000 BTC28th Nov, 2012
22016420,00012.50000000 BTC9th Jul, 2016
32020630,0006.25000000 BTC11th May, 2020
42024840,0003.12500000 BTC20th Apr, 2024
52028 (est)1,050,0001.56250000 BTC
62032 (est)1,260,0000.78125000 BTC
72036 (est)1,470,0000.39062500 BTC
82040 (est)1,680,0000.19531250 BTC
92044 (est)1,890,0000.09765625 BTC
102048 (est)2,100,0000.04882813 BTC
112052 (est)2,310,0000.02441406 BTC
122056 (est)2,520,0000.01220703 BTC
132060 (est)2,730,0000.00610352 BTC
142064 (est)2,940,0000.00305176 BTC
152068 (est)3,150,0000.00152588 BTC
162072 (est)3,360,0000.00076294 BTC
172076 (est)3,570,0000.00038147 BTC
182080 (est)3,780,0000.00019073 BTC
192084 (est)3,990,0000.00009537 BTC
202088 (est)4,200,0000.00004768 BTC
212092 (est)4,410,0000.00002384 BTC
222096 (est)4,620,0000.00001192 BTC
232100 (est)4,830,0000.00000596 BTC
242104 (est)5,040,0000.00000298 BTC
252108 (est)5,250,0000.00000149 BTC
262112 (est)5,460,0000.00000075 BTC
272116 (est)5,670,0000.00000037 BTC
282120 (est)5,880,0000.00000019 BTC
292124 (est)6,090,0000.00000009 BTC
302128 (est)6,300,0000.00000005 BTC
312132 (est)6,510,0000.00000002 BTC
322136 (est)6,720,0000.00000001 BTC
332140 onward6,930,000 onward0.00000000 BTC

How Does The BTC Halving Impact Price?

Bitcoin Halving Price Impact
Price impact of the last two Bitcoin Halvings

Bitcoin Halving cycles have had a distinct influence on Bitcoins price, all of them hugely positive.

The reason for this is actually pretty basic. When the halving happens the supply of new bitcoins that are available reduces by half instantly. This huge reduction in supply happens while the demand for bitcoins stays basically the same. Economics 101 states that if supply is reduced while demand is kept the same, prices will increase.

While the actual day of the halving isn’t usually anything to write home about price wise, it’s clear from the past two that when you zoom out a bit there’s a huge price appreciation that has happened every time. Will this happen again in 2028? No one can say, least of all us, but it seems like a reasonable theory.


What Happens When Bitcoin Halves?

When Bitcoin halves, the size of the Block Subsidy that is paid to miners is cut in half. This happens every 210,000 block or about every 4 years.

Why Are The Halvings Occurring Less Than Every 4 Years?

Bitcoin Halving happens every 210,000 blocks. Because a block is mined on average every 10 minutes, this means it happens every 21,000,000 Minutes = 35,000 Hours = 3.9927 Years.

What Date Was Bitcoin Halving?

The 1st Bitcoin Halving was on the 28th Nov, 2012. The 2nd Bitcoin Halving was on the 9th Jul, 2016. The 3rd Bitcoin Halving was on the 11th May, 2020. The 4th Bitcoin Halving was on the 20th April, 2024. The 5th Bitcoin Halving is estimated to happen sometime in 2028.

Will Bitcoin Go Up Or Down After Halving?

No one can say, least of all us. However, the past three halvings have resulted in Bitcoins price increasing steeply over the year after the Bitcoin Halving day occurred.

Who Chose The Bitcoin Distribution Schedule?

Bitcoin’s pseudonymous creator, Satoshi Nakamoto was the one who chose the Bitcoin distribution schedule. When they wrote the original Bitcoin Core code base, it was encoded into it and has never been changed since.

Want to get serious about safely and privately using Bitcoin? You need to subscribe now.

Benefits Include:
Read by the top experts, writers, investors and companies in Bitcoin
Learn more about Bitcoin than 99% of people in just one hour a month
Secure your Bitcoin investments and ensure they stay safe from hackers
Know what risks your investments are exposed to and how to fix them
Keep pace with Bitcoins rapid growth and what opportunities it enables
Get insights into how Bitcoin can help your business or work save thousands
Step-by-step guides for all aspects of Bitcoin (wallets, buying and more)
How to do all of these things and maintain your privacy!