Bitcoin halving is an event that occurs approximately every four years or after every 210,000 blocks. When a halving occurs, the block reward is reduced by half. This means that miners receive half the number of Bitcoins for successfully mining a block. The purpose of halving is to gradually decrease the supply of new Bitcoins over time until the maximum supply of 21 million Bitcoins is reached.
The Bitcoin halving events have the following sequence:
- The first halving occurred in 2012 when the block reward was reduced from 50 to 25 Bitcoins.
- The second halving occurred in 2016, reducing the block reward from 25 to 12.5 Bitcoins.
- The third halving occurred in 2020, further reducing the block reward to 6.25 Bitcoins.
Halvings have a significant impact on the Bitcoin ecosystem. They reduce the rate of inflation, increase scarcity, and can potentially drive up the price due to the reduced supply of newly minted coins. Halvings also affect miners’ profitability, as they receive fewer Bitcoins as rewards. This encourages efficiency and the use of more powerful mining equipment.