Bitcoin Halving
Overview
A Bitcoin Halving is a pre-programmed event in the Bitcoin protocol that cuts the reward for mining new blocks in half. This event occurs approximately once every four years, or every 210,000 blocks mined, and continues until all 21 million Bitcoins have been successfully issued into circulation.
Mechanism
The halving is built directly into Bitcoin's source code by Satoshi Nakamoto to enforce a synthetic deflationary supply schedule. In 2009, the original block reward was 50 BTC. In 2012, it was halved to 25 BTC, followed by cuts to 12.5 BTC in 2016, 6.25 BTC in 2020, and 3.125 BTC in 2024.
Economic Impact
By reducing the rate at which new Bitcoins are generated, the halving decreases the incoming supply of new coins. If demand for Bitcoin remains constant or increases, this supply shock historically puts upward pressure on the asset's price, serving as a primary catalyst for long-term crypto market cycles.