Halving

Learn what a cryptocurrency halving is, how it reduces mining rewards, and why it matters for miners and supply.

3 min read
mining

Definition

A halving is an event in some cryptocurrencies where the reward paid to miners for adding a new block is cut in half. It is most commonly associated with Bitcoin, where halvings are built into the protocol and happen on a predictable schedule. Halving reduces the rate at which new coins enter circulation.

How It Works

  1. Miners compete to add new blocks to the blockchain by using computing power to solve a proof-of-work puzzle.

  2. When a miner finds a valid block, the network pays a block reward. This reward usually includes newly created coins plus transaction fees from the block.

  3. At a set block height, the protocol automatically cuts the newly created coin reward by 50%. In Bitcoin, this happens every 210,000 blocks, which is roughly every four years.

  4. The halving does not change old coins, account balances, or past transactions. It only changes the reward for future blocks.

  5. Over time, repeated halvings make new coin issuance smaller and smaller. For Bitcoin, this process continues until the maximum supply of 21 million bitcoin has been issued.

Why It Matters

  • It slows new supply. After a halving, fewer new coins are created per block.

  • It affects miner revenue. If coin price and fees do not rise, miners earn less from each block reward after the halving.

  • It can change mining competition. Less efficient miners may become unprofitable, while efficient miners with low electricity costs may keep operating.

  • It supports predictable monetary policy. Anyone can check the code and know when future reward cuts are expected.

  • It is watched by markets. Traders often pay attention to halvings because they change supply growth, though they do not guarantee price increases.