The last Bitcoin halving took place in May 2020, an event that was followed by a Bitcoin bull run — could the two be connected?
What Is a Bitcoin Halving?
After deciding to limit the supply to 21 million coins, Satoshi implemented a mechanism which would release BTC in a predictable way over time – every 210,000 blocks – which we call a ‘halving’.
After each halving, Bitcoin miners receive half as much Bitcoin for their services. This makes mining more competitive and encourages miners to source cheaper sources of fuel to power their operations.
It might seem illogical for miners to continue working for half as much profit; however, new bitcoins are scarcer after each halving, which should increase the value of each coin.
Indeed, price data shows that historically, Bitcoin does increase in value after each halving, thereby helping miners recover lost earnings. However, just because something has happened in the past doesn’t mean it’s guaranteed to do so in the future.
The Bitcoin mining reward will halve 32 times before Bitcoin’s full supply of 21 million coins will have been reached. This should happen by 2140. To date, 19,370,000 coins have been mined.
Before the first halving, Bitcoin miners received an enormous block reward of 50 BTC per block. But as of May 2023, after three halvings, the block reward has been reduced to 6.25 BTC per block. Over time, the impact of each halving will diminish as the block reward approaches zero.
Also Read: Bitcoin Halving History
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When Was the Last Bitcoin Halving?
The last Bitcoin halving occurred on May 11, 2020, at a block height of 630,000.
In the lead-up, speculation circulated about the halving's effects on mining, the network and price. Some forecasted it would kick off a bull run. Others cautioned it could jeopardize network security.
After the halving, Bitcoin's price climbed to new highs. By December of the year, it reached $29,000. And in 2021, it surpassed $60,000. While unclear how much growth the halving directly caused, it preceded a bull market.
The 2020 halving was a milestone - lowering inflation and increasing scarcity. The Bitcoin community sees halvings as bullish events spotlighting the limited supply.
When Is the Next Bitcoin Halving?
The next Bitcoin halving will take place at block 840,000, which is estimated to be on April 7, 2024. This is about 328 days away, at the time of writing. On this date, the block mining reward will drop from 6.25 BTC to 3.125 BTC per block.
Bitcoin tends to bottom 12-18 months prior to the halving event, and historically has performed well leading up to the halving catalyst event. BTC has gained around 65% since Jan. 1, 2023.
Bitcoin Halving History
The First Halving - Nov. 28, 2012
The Second Halving - July 9, 2016
The second Bitcoin halving took place on July 9, 2016, at block 420,000. The block reward was reduced from 25 BTC to 12.5 BTC. The community anticipated a price boom driven by the halving. While the price on halving day closed at $640.56, Bitcoin saw an incredible bull run in 2017 with the price reaching nearly $20,000 by year's end.
The Third Halving - May 11, 2020
On May 11, 2020, the third Bitcoin halving occurred at block 630,000. The mining reward was cut in half again to 6.25 BTC per block. Speculation grew about institutional adoption and Bitcoin as an inflation hedge. The price surged after the halving, kicking off another bull run in 2021.
The Fourth Halving - April 2024
The next halving is expected to occur around April 2024 at block 840,000. The mining reward will decrease to 3.125 BTC. The Bitcoin community eagerly anticipates this next milestone and its impact on the price.
Halvings will continue approximately every four years until all 21 million Bitcoins are mined.
Bitcoin Halving Chart: Do Halvings Impact the Price?
As shown above, past halvings do seem to have affected Bitcoin’s price: during the year following every halving, Bitcoin’s price has risen between 384-2,824%. But that doesn’t necessarily mean that halvings impact Bitcoin’s price: it’s possible the two events are correlated, but that halvings don’t directly influence the price.
It's worth noting that Bitcoin’s price has historically sat consistently higher after each halving. Before the 2016 halving, for instance, Bitcoin’s value generally hovered at around $600. Whereas after the halving, its value rose to about $18,000 and then hovered between $3,500 and $12,000 until the subsequent halving in 2020. The same pattern can also be seen following the 2020 halving, after which Bitcoin’s price has hovered between $20,000-$35,000.
How Does the Halving Impact the Hash Rate?
The Bitcoin halving can have a significant impact on the network hash rate. When the block reward is cut in half, mining Bitcoins becomes less profitable. Some miners may find it is no longer profitable to continue operations. This can lead to a decrease in the overall Bitcoin network hash rate as less efficient miners shut down their machines.
More efficient miners with lower costs can still earn a profit, and increased interest in Bitcoin after the halving often attracts additional miners and hash power. While temporary dips are common, the network hash rate has trended upward over time, from ~8 TH/s in late 2012 to over 350 million TH/s at the time of writing.
How Do Bitcoin Halvings Affect Miners?
Mao said the loss of profitability for miners had not been greater than they had expected. He did note, however, that a Bitcoin halving event means that miners have to decide if they can afford to continue mining, and that might mean looking for lower electricity costs and other ways that they can save on overall costs to keep their mining machines running and earning new coins.
Some argue that the price increases Bitcoin has experienced following past halvings have more than compensated miners for the lower number of Bitcoins earned for mining each block. To put it another way, miners are earning fewer Bitcoins, but those Bitcoins are worth more than double what they were before the halving.
What Is the Current Bitcoin Block Reward?
As of September 13, 2023, the current Bitcoin block reward is 6.25 BTC. The block reward is a critical part of the Bitcoin network, as it is a core piece of the incentive structure that ensures Bitcoin miners continue to validate and secure the blockchain. The block reward refers to the number of Bitcoins awarded to miners for being the first to solve a complex problem and create a new block of verified Bitcoin transactions. The amount of the reward halves after the creation of every 210,000 blocks, or roughly every four years. In the next halving, the reward will decline to 3.125 BTC.
Bitcoin Halving Countdown
If I Own Bitcoin, Will Anything Change for Me After the Halving?
Your Bitcoin won’t be directly affected besides any subsequent price changes.