Bitcoin halving: what it is and why it matters
Key takeaways
04 · ideas- Bitcoin maximum supply is capped at 21 million coins
- Halvings occur every 210,000 blocks, approximately every 4 years
- The block reward dropped from 50 BTC in 2009 to 3.125 BTC in 2024
- Miner revenue shifts over time from block rewards toward transaction fees
Basic level
The essentials · 1 min
Bitcoin halving refers to a pre-programmed event where the reward given to miners for validating transactions is cut in half.
Bitcoin was designed with a fixed maximum supply of 21 million coins. New coins enter circulation as block rewards. The halving controls how quickly that happens.
| Year | Block reward |
|---|---|
| 2009 (launch) | 50 BTC |
| 2012 | 25 BTC |
| 2016 | 12.5 BTC |
| 2020 | 6.25 BTC |
| 2024 | 3.125 BTC |
| ~2028 | ~1.56 BTC |
Halvings continue until approximately 2140, when the last fraction of a bitcoin will have been mined.
Intermediate level
How it applies · 2 min
Supply inflation over time
At launch, roughly 7,200 BTC were created per day. After the 2024 halving, approximately 450 BTC are created daily. The annual inflation rate of the Bitcoin supply has fallen as a result:- 2009-2012: ~50%
- 2020-2024: ~1.8%
- 2024-2028: ~0.85%
For comparison, gold annual supply growth is estimated at 1.5-2%.
Miner economics
Miners receive two types of revenue: block rewards and transaction fees. Block rewards currently represent the majority. As rewards continue to halve, transaction fees are expected to represent an increasingly large portion of miner income. The long-term sufficiency of fees to secure the network is an open question in Bitcoin economics.
Advanced level
The math, step by step · 1 min
Stock-to-flow model
The stock-to-flow (S2F) model defines:
Gold S2F is approximately 60. Bitcoin S2F after the 2024 halving is approximately 120. The model posits a relationship between scarcity and market value. Critics note it is a single-factor model that does not account for demand, regulation, or competitive dynamics. Its predictive accuracy has been widely debated.