An event in which the total rewards per confirmed block halves.
A halvening (or halving) is a deflationary blockchain event where block subsidies or rewards received for validating transactions decrease by half. It is significant in the sense that it reduces the rate of supply coming into circulation at every instant, and thus increases the scarcity by bringing fewer and fewer units of coins/tokens into existence.
These events are programmed directly into the code and made known in advance. For instance, Bitcoin rewards are programmed to decrease approximately every four years. Block rewards are currently 6.25 BTCs per block (900 BTCs daily), down from 12.5 BTCs (1800 BTCs) since 2Q20. The rewards will continue to decrease every four years like this, until the last Bitcoin is mined in approximately 2140.
Halvenings have the added benefit of making the emission schedule more predictable, as the circulating time can be estimated at any point in time. This can allow the determination of token valuation with accuracy. It’s a design feature of nearly all cryptocurrencies that are not pre-mined that the staking or mining rewards decrease over time. New projects are often designed to bring only the minimum viable supply required at launch into circulation, in order to increase its initial value..
Bitcoin’s 2020 halving was its third, following the mining reductions in 2016 and 2012. Each halving was followed by a strong price increase due to increased scarcity and a tightening of supply from miners. Other notable halvings include that of altcoins Bitcoin Cash and Litecoin.
The next Bitcoin halvening is scheduled for March 2024 and will see mining rewards fall to a mere 3.125 BTC per block.