The Bitcoin halving is here. On Friday, just after 8 p.m. ET, the Bitcoin network successfully underwent its programmed reduction in newly issued BTC. After the 840,000th Bitcoin block was created, successful miners now earn 3.125 BTC per block completed, in addition to network transaction fees.
Representing the fourth halving event in Bitcoin’s history, the moment was widely anticipated by the crypto community in recent weeks. Meanwhile, the price of Bitcoin was up slightly for the day, just under 1%, trading at around $64,000, according to data from CoinGecko.
The change in Bitcoin’s software boils down to its goal of digital scarcity. Bitcoin’s pseudonymous inventor, Satoshi Nakamoto, placed a hard cap of 21 million Bitcoin on the asset’s total supply when the world’s first cryptocurrency was launched in 2009.
The number of Bitcoin in circulation currently stands at more than 19.6 million—representing the vast majority of Bitcoin that will ever be created, according to Blockchain.com. Halvings are expected to occur roughly every four years until the last one takes place sometime in the mid-22nd century.
Bitcoin blocks—batches of transactions added to Bitcoin’s blockchain approximately every 10 minutes—determine the rate at which new halvings occur. Some 210,000 blocks ago, for example, miners’ rewards were reduced in 2020 from 12.5 BTC to 6.25 BTC.
Computers across the globe running Bitcoin software help keep the network secure. Racing to solve complex mathematical puzzles, a sum of Bitcoin is awarded to the miner that solves said problem first, given that at least 50% agree the transactions are valid.
As a result of the halving, the cost for miners to produce Bitcoin effectively doubles. While the event doesn’t directly increase the amount of energy that Bitcoin’s network consumes, it creates headwinds for miners with smaller operations or who lack computational resources.
The constant competition between miners solving complex problems ensures that no fraudulent transactions make it into Bitcoin's blockchain. And 15 years into Bitcoin’s existence, it appears that the process is humming along as designed.