Crypto Beginner

What is Bitcoin halving? How it works?

Bitcoin halving is a defining feature of the pioneering crypto, Bitcoin. It plays a key role in ensuring that Bitcoin remains valuable over a long period of time. In this article, we’ll look at halving, how it works, and why it matters.

What is Bitcoin halving?

Bitcoin halving is an event that occurs every four years or precisely after every 210,000 blocks mined on the Bitcoin network. The event is so named because it halves the rewards given to miners. It is designed to keep the supply of bitcoin tokens (BTC) in check.

What does the process of Bitcoin halving entail?

When some miner verifies a block of Bitcoin transactions, they receive a certain amount of BTC as a reward. Halving, an event that occurs every four years, cuts this reward in half. It is designed to limit the supply of BTC. The blockchain protocol implements this by reducing the amount of BTC created each time a block is mined.

The first halving occurred in November 2012. At the time, the block reward was cut from 50 to 25 BTC. The second halving occurred in July 2016. At the time, the rewards for miners were again slashed to half—from 25 to 12.5. The most recent halving occurred in May 2020. This time, the rewards fell from 12.5 to 6.25 BTC. Investors closely observed all of these events. As a result, they left a significant impact on the price of BTC.

The next Bitcoin halving event will take place in 2024.

The maximum supply of BTC is 21 million. That means the network’s protocol caps the total number of BTC that can exist at 21 million. So all coins will have been mined by 2140, and that’s the last time we will see a Bitcoin halving.

Before we dig deeper into how Bitcoin halving affects us as stakeholders, it is important to understand how the functioning of the Bitcoin network and the mining process.

How does the Bitcoin network work?

The Bitcoin network is built on top of the first decentralized blockchain conceptualized by Satoshi Nakamoto in 2008. To understand the functioning of the Bitcoin network, we need to understand the blockchain.

The network comprises computers called nodes that work together using special software. These nodes keep track of all the transactions on the Bitcoin network, forming a digital record called the blockchain. Put simply, it’s like a digital ledger that keeps track of all the transactions made with Bitcoin.

To approve a transaction on the Bitcoin network, a node must ensure it’s valid. This means checking if it meets certain requirements and is of the right length. Each transaction is checked individually.

Once a group of transactions, called a block, is approved, it gets added to the existing blockchain. This means that the transaction is permanently recorded and shared with other nodes in the network.

Then comes the validation stage. Miners verify the validity of transactions by solving complex mathematical puzzles in a process called mining. Miners compete to solve the puzzle, and the first miner to find a solution broadcasts it to the network. Other miners verify the solution, ensuring its correctness. Once a consensus is reached, the block is added to the blockchain, and the miner is rewarded with newly minted Bitcoin and transaction fees.

The network’s security relies on the consensus mechanism called Proof-of-Work (PoW). PoW makes it computationally expensive to alter the blockchain’s history, ensuring transaction integrity. And on top of everything is the decentralized system that ensures the integrity and transparency of the Bitcoin network.

How does Bitcoin mining work?

Bitcoin mining is like digging for virtual gold in the Bitcoin network. Miners use special computers or hardware to do this job. Let’s understand the process in detail.

Bitcoin mining is the process where individuals or mining hardware use computers to participate in the Bitcoin blockchain network. Bitcoin miners compete to solve complex mathematical problems, requiring expensive computers and substantial electricity consumption. They strive to be the first to find the correct or closest answer to the problem, known as proof of work (PoW). This involves making numerous guesses rapidly with powerful computing equipment, and the difficulty increases as more miners join the network.

Miners who solve the puzzle first receive a reward in the form of new Bitcoin for their hard work. The reward incentivizes miners to participate and help maintain the blockchain. When miners successfully add a block to the blockchain, they are rewarded with 6.25 Bitcoin. The reward is halved roughly every four years or every 210,000 blocks. 

Mining is important as it helps the Bitcoin network run smoothly and securely. It is important to note that mining requires a lot of electricity, which reduces miners’ profitability and raises concerns from environmental groups. Ethereum, the world’s second-largest crypto, shifted from a proof-of-work (PoW) to the less energy-intensive proof-of-stake (PoS) consensus mechanism.

How does the Bitcoin halving affect us?

There are several far-reaching implications of Bitcoin halving for both investors and miners.

For investors, the impact of halving on the price of BTC is a key concern. As the rewards for miners reduce, the supply of BTC takes a hit, thus making the crypto more scarce and valuable.

As for miners, when the rewards reduce, the mining difficulty increases. Because miners need to work harder to earn the same amount of Bitcoin. So it’s harder to make a profit or even cover their costs.

What purpose does the Bitcoin halving serve?

The halving of block rewards is one of the reasons Bitcoin still has value. Every halving event reduces the number of BTC being created by the network. This limits the supply of new coins, so the price can rise so long as demand remains strong. Halving thus also counteracts inflation by maintaining scarcity. Additionally, it ensures that the total number of BTC in circulation remains consistent and predictable.

Before the first halving in November 2012, for instance, BTC’s price was $12. Post-halving, the price jumped to $1,207. The price was around $647 during the start of the second halving in 2016. By the end of 2017, it had already reached $18,792. Similarly, during the third and the most recent Bitcoin halving in May 2020, the BTC price was around $8,821. The price reached $63,233 by the following month.

That said, it is important to understand that a price surge is not guaranteed. Sometimes, reduced mining activity due to the halving could cause the price to level off.


Bitcoin halving is an important event for investors and miners alike, as it helps to maintain the value of the currency. If you’re an investor or miner looking to take advantage of upcoming halving events, there are a few steps you can take to prepare. Make sure to do your research, ensure that you have a secure wallet, diversify your investments, and stay informed. Informed decisions will be your best bet during the next halving.


When Was the First Bitcoin Halving?

The first Bitcoin halving occurred on November 28, 2012.

Do halvings boost Bitcoin’s price?

Halvings have historically had a positive impact on Bitcoin’s price due to reduced supply and increased scarcity. However, price movements are influenced by various factors, and past performance does not guarantee future results.

Is Bitcoin halving bullish or bearish?

Bitcoin halving is generally considered bullish for the long term. The reduction in new supply and increased scarcity can create upward price pressure. However, short-term price movements can be influenced by other factors and market dynamics.

How long does it take to mine 1 Bitcoin?

The time it takes to mine 1 Bitcoin can vary based on factors such as the mining hardware’s hash rate, network difficulty, and the mining pool’s collective power. On average, it currently takes around 10 minutes to mine a new Bitcoin block, which includes the reward of 6.25 Bitcoins for the successful miner.

If I own Bitcoin, will anything change for me after the halving?

As a Bitcoin holder, the halving itself won’t directly impact your ownership. However, the halving can potentially affect the overall Bitcoin market dynamics, including supply and demand dynamics, miner incentives, and price trends, which may indirectly impact the value of your Bitcoin holdings.

What is the purpose of Bitcoin halving?

Bitcoin halving decreases the rate at which new coins are generated. By doing this, it helps ensure that the market is not gutted with BTC, ensuring that the price will stay up so long as demand remains strong. It thus ultimately makes Bitcoin more valuable.

Do Bitcoin halvings help increase the price of BTC?

The history of Bitcoin shows that after every halving event, the price of its coin has increased in a year’s time. However, one cannot discount the possibility of the reduced mining causing the price to level off. So do your own research before making any investment decisions.

Will Bitcoin mining be profitable after halving?

The rewards for mining fall after each halving, but the value of BTC also increases. There could also be a decrease in competition and a resulting increase in mining opportunities. If a miner remains competitive by investing in the right tools, joining a mining pool, and so on, mining can be profitable after halving. However, it is important to note that in addition to Bitcoin halving, there are a lot of other variables involved in making mining on the network more profitable.

What is happening in 2024 on the Bitcoin front?

The year 2024 marks the next Bitcoin halving event. It would be the fourth halving event, preceded by 2020, 2016, and 2012, respectively.

What will happen during the next Bitcoin halving?

During the next halving in March 2024, the Bitcoin network is estimated to have 8,40,000 blocks. The reward for mining BTC will decrease from 6.25 to 3. 125 BTC per block.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered investment/financial advice from CoinSwitch. Any action taken upon the information shall be at the user’s risk.

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