Halving

Halving refers to the process in which the reward for mining new blocks in a blockchain, specifically in cryptocurrencies like Bitcoin, is cut in half. This occurs approximately every four years, or after 210,000 blocks are mined in the Bitcoin network. Halving events reduce the rate at which new coins are created, lowering supply and often leading to price increases due to scarcity. The purpose of halving is to ensure that Bitcoin follows a controlled supply model, with a maximum of 21 million coins to be mined.

Example

In 2020, Bitcoin’s block reward was halved from 12.5 BTC to 6.25 BTC. This event reduced the amount of new Bitcoin entering circulation, contributing to increased demand and higher prices.