Cracking the code on the Bitcoin halving: what you need to know

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Sam Adams
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Samantha Adams
Head of Content

If you've been exploring the world of Bitcoin, chances are you've come across the term "Bitcoin halving or “the halvening”. In fact the 4th Bitcoin halving just happened on 19th April - but what exactly is it and why does it matter? Find out in this blog as we explore how the Bitcoin halving affects the price and what it means for Bitcoin miners.

What is the Bitcoin halving?

Bitcoin halving is an event programmed into the Bitcoin protocol that halves the reward miners receive for validating transactions. It occurs approximately every four years - after 210,000 blocks are mined.

The basics of Bitcoin mining

Before we explain the halving, let’s get to grips with the basics of Bitcoin mining. Bitcoin mining is the process by which new bitcoins are created - transactions are verified and added to the blockchain, which is a public ledger of all Bitcoin transactions.

Miners compete using powerful computers to solve complex mathematical puzzles. These puzzles are part of a process called Proof-of-Work (PoW), and ensure the security and integrity of the Bitcoin network. The first to find the correct solution gets to add a new block of transactions to the blockchain and as a reward for their efforts, they receive newly minted bitcoins and transaction fees associated with the transactions in the block they mined.

Understanding Bitcoin halving

To tie it all together… Bitcoin works on a fixed supply model, capped at 21 million coins. Unlike traditional currencies that can be endlessly printed, Bitcoin has a controlled issuance rate. Bitcoin’s creator, Satoshi Nakamoto, designed the Bitcoin halving to reduce the reward the miners receive. The rationale behind this is that the cryptocurrency will enter the market at a slower rate which maintains scarcity and protects from inflation. Exactly every 210,000 blocks, the reward miners receive for adding new blocks to the blockchain is halved. For example, before the last halving (19th April 2024) miners received 6.25 BTC when they successfully validated a new block on the chain and the reward is now 3.125 BTC.

Bitcoin halving history

Bitcoin halving events have occurred at specific intervals. In the below table you can see the dates of the Bitcoin halvings alongside the corresponding rewards and block height. It generally takes around 4 years between halvings, depending on how quickly the blocks are mined.

Bitcoin halving dates / schedule

Date (estimated)RewardHeight
Genesis3 Jan 200950 BTC1
1st halving28th Nov 201225 BTC210,000
2nd halving9th Jul 201612.5 BTC420,000
3rd halving11th May 20206.25 BTC630,000
4th halving19th Apr 20243.125 BTC840,000
5th halving(2028)1.5625 BTC1,050,000
6th halving(2032)0.78125 BTC1,260,000
Final halving(2140)

Why does Bitcoin halving matter?

Scarcity and inflation

Bitcoin is often referred to as "digital gold" because, like gold, it's scarce. The halving event reinforces this narrative, as the lower reward and declining rate of new Bitcoin creation, makes each coin relatively more scarce over time.

Graph demonstrating Bitcoin supply and subsidy - CoinDesk Research

Supply and demand dynamics

As the amount of new Bitcoins introduced into circulation slows down, demand increases. This potentially impacts the supply-demand dynamics, driving up the price if demand remains constant or increases. You’ll notice the price of Bitcoin generally rises after each halving - although this shouldn’t be presumed.

How does the halving influence Bitcoin's price?

A Bitcoin halving grabs a lot of attention mainly because many believe it will lead to a price increase. The theory is that when the supply of Bitcoin declines, the demand for Bitcoin will stay the same, pushing the price up. However, the truth is, no one knows for sure what's going to happen.

Bitcoin has seen four halvings so far, which we can look to as precedents. Historically, there has been speculation that halving events contribute to bullish sentiment. However, it's essential to approach such predictions with caution, as market dynamics are influenced by a multitude of factors beyond just halving events.

Bitcoin halving chart

Below, you'll find a Bitcoin halving history chart, detailing the dates of past halving events and their corresponding market movements.

Bitcoin's Halving Timeline : Source Coin Metrics via CoinDesk

As the chart shows, there is normally a rapid increase in price after the halving. As Bitcoin reached it’s all time high earlier this year, it will be interesting to see the updated chart after the fourth halving because this is the first time it has followed a peak.

Does the Bitcoin halving impact the wider cryptocurrency market?

In the past, Bitcoin halvings have led to rallies in the wider cryptocurrency market. It’s possible that halvings lead to increased attention on the crypto ecosystem — which in turn leads to higher demand and higher prices for all digital assets.

What does the halving mean for Bitcoin miners?

The Bitcoin halving has significant implications for miners. With the halving of block rewards, miners receive half the number of bitcoins for validating transactions. Bitcoin mining can be expensive with high cost hardware not to mention rising energy costs. This reduction in rewards can affect the profitability of their mining operations, especially for those with higher operating costs.

As Bitcoin mining rewards get smaller, miners may rely on transaction fees as a method of earning, however because of the small amount of on-chain transactions that occur it’s questionable whether this will really compensate enough. Some miners may be forced to shut down their operations if they're no longer profitable, leading to a potential decline in hash rate and network security.

Tax considerations: what you need to know

Finally, let's talk taxes. While Bitcoin halving itself doesn't directly trigger tax events, any subsequent transactions involving Bitcoin may have tax consequences depending on your tax jurisdiction.

  1. Capital gains: If you've held Bitcoin as an investment and decide to sell or exchange it for fiat currency or another cryptocurrency, you may incur capital gains tax. The difference between the purchase price and the selling price determines your capital gains, which may be subject to tax depending on your jurisdiction, holding period and total gain in the tax year.
  2. Income from mining: For miners, the rewards earned from validating transactions are typically treated as income and subject to taxation. How it should be reported depends on various factors, including your mining setup and local tax laws.

Take a look through our crypto tax guide for more detailed information on how Bitcoin is taxed in your jurisdiction.

Final thoughts on Bitcoin halving

Bitcoin halving is a pivotal event in the Bitcoin ecosystem and whether you're a seasoned hodler or just dipping your toes into the crypto waters, understanding it's significance can help you navigate the world of Bitcoin with a bit more clarity.

Miners should consider the profitability of their operation as rewards reduce and investors should watch out for price fluctuations around the halving. It’s important to remember that Bitcoin, and other cryptoassets for that matter, are highly volatile and past performance cannot be relied on to predict future market trends.


What is the Bitcoin halving?

Bitcoin halving is a predetermined event in the Bitcoin network where the reward for miners is halved every 210,000 blocks, occurring roughly every four years, to control the rate at which new bitcoins are issued.

Does the price of Bitcoin rise after halving?

Historically, the price of Bitcoin has increased after each halving, however this may not always be the case. Cryptocurrency is volatile and the price of Bitcoin and other cryptoassets can fluctuate based on many factors.

When is the next Bitcoin halving?

The next Bitcoin halving is predicted to take place in 2028.

How often is there a Bitcoin halving?

Bitcoin halving occurs after every 210,000 blocks, normally every four years.

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