When was the first bitcoin halving?

Why the reward halves

Bitcoin has no central bank to issue new money. Instead, whoever adds the next blockBlockA batch of transactions added to Bitcoin's shared record, about every 10 minutes on average. to the chain, a minerMinerA computer, or a pool of them, that bundles waiting transactions into blocks and secures the network, paid in new bitcoin and fees., may pay themselves a set amount of brand-new bitcoin in the block's first transaction, along with the fees of the transactions inside it. Together these are the block rewardBlock rewardWhat a block's miner earns: new bitcoin from the subsidy, plus the fees of every transaction in the block.. Satoshi Nakamoto's whitepaper of 2008 compared the new coins to gold: “The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation.” It added that once a fixed number of coins had been issued, “the incentive can transition entirely to transaction fees and be completely inflation free.”

When Satoshi released the first Bitcoin software on 8 January 2009, the email gave the schedule: “Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.” Half of all the coins, 10,500,000, would come in the first four years, and 5,250,000 in the next four. In the earliest copy of the code kept on GitHub, the rule takes one line, under the comment “Subsidy is cut in half every 4 years”: the 50-coin reward is halved once for every 210,000 blocks. With a new block about every ten minutes, 210,000 blocks take roughly four years. That cut is the halvingHalvingEvery 210,000 blocks, about every four years, the new bitcoin created in each block is cut in half..

By November 2012 the first four years were nearly done. “The number of BTC added per day will drop from an average of 7,200 to 3,600 per day,” the technology site SiliconANGLE wrote the day before, quoting Neil of the mining site Mineforeman.com, who called mining “a delicate balance of difficulty vs electricity costs”.

Block 210,000

Block 210,000 carries the time 15:24:38 UTC on 28 November 2012, according to mempool.space. Its first transaction paid 25 new bitcoin instead of 50, the first time the reward had ever changed. The block before it, 209,999, was found by the pool BTC Guild 23 minutes earlier and was the last to pay 50.

The winner was Slush's pool, then called Bitcoin.cz Mining and now Braiins Pool: the oldest mining poolMining poolA group of miners who share the work of finding blocks and split the rewards, so each gets paid steadily instead of rarely. still running, started in Prague in 2010 by Marek Palatinus, who posts as slush. A pool combines many small miners' computers and shares out what they earn. The Bitcoin Wiki says the lucky miner in the pool was a member called laughingbear, using a Radeon HD 5800 series graphics card that had been mining for less than a week. In August 2013 the card itself was sold, the wiki adds, at a large markup.

Within seven minutes someone had started a thread on the Bitcoin forum, Bitcointalk, headed “210000 block found”. The first question was about money: “13.56 transaction fee, why so high?” The block's fees came to 13.56 bitcoin, about 25 times those in the block before it. “People wanted to be part of the glory I guess,” one reply suggested. Another member said: “Everyone was trying to get their transaction in. People paid A LOT.” Slush himself pointed to an idea posted on Reddit for the 210,000th block as a possible reason. One transaction gathered 197 small amounts of bitcoin and passed on less than 0.09 bitcoin, leaving 7 bitcoin as its fee. Nobody in the thread said whether that was deliberate.

Molecular, another member, passed on what slush had told him: the finder was “pretty new on the pool and is mining with average gpu”. Theymos, who runs the forum, asked whether the finder, or the miner at BTC Guild who solved block 209,999, had a forum account: “I was going to give them special forum titles.” And one member noticed a small, lasting change in the numbers: “It's so weird seeing the BTC total ending in a 5 instead of a 0.”

What happened to miners

Overnight, every miner earned half as much new bitcoin for the same work. Bitcoin adjusts for how much computing power is mining every 2,016 blocks, about two weeks, by changing the difficultyDifficultyHow hard it is to mine a block. Bitcoin resets it every 2,016 blocks, about two weeks, so blocks keep coming about every 10 minutes., how hard it is to find a block. If miners switch off, blocks come more slowly and the difficulty falls. Two days before the halving it had risen by 2.1%. In the two adjustments after it, it fell by 2.0% on 10 December and by 11.6% on 26 December, by mempool.space's records: a sign that some miners had switched off.

The pause did not last. In January 2013 a company called Avalon began delivering the first ASICASICA machine built to do nothing but Bitcoin mining: chips that hash trillions of times a second, far beyond any ordinary computer. miners, machines built to do nothing but Bitcoin's sums, which left graphics cards far behind. Jeff Garzik, a Bitcoin developer, reviewed one on 31 January: it reported 67.5 billion guesses a second, against the 60 billion Avalon had promised. On 24 March 2013 the difficulty rose by 38% in a single adjustment, and graphics cards soon could not keep up. You can follow the same adjustments today on the difficulty page.

Did the halving push the price up?

Bitcoin traded at about $12 at the time of the first halving, TechCrunch recalled in 2016. A year later, on 27 November 2013, it reached $1,000 on Mt. Gox, then the world's largest exchange for dollars and bitcoin, CoinDesk reported. Whether the halving caused that rise is still argued over.

The case against is that the halving was no secret. Matt Hougan and Juan Leon of the fund manager Bitwise put it this way in a 2024 report: “we have known when halvings would occur since bitcoin's inception. In an efficient market, the impact should already be accounted for.” The case for, as Hougan argued the same week, is that miners are the sellers who must sell to pay their bills, and the halving halves the new coins they have, while demand can change in ways nobody expects: “what if future demand for bitcoin is higher than the market currently anticipates?”

The same report found the price had risen far more in the year after each of the first three halvings than in the year before, but the average leaned heavily on the rise of 8,839% after 2012. With so few halvings to compare, its authors wrote, “we have limited data”. Many other things changed in bitcoin's first years, so a single cause is hard to prove.

The halvings since

The reward has halved three more times, as the code requires: to 12.5 bitcoin at block 420,000 on 9 July 2016, to 6.25 at block 630,000 on 11 May 2020, and to 3.125 at block 840,000 on 20 April 2024. Bitcoin Core, the most widely used Bitcoin program, still sets the gap at 210,000 blocks. The next halving is due at block 1,050,000, and the halving countdown estimates its date from recent block times.

Rewards are counted in satoshisSatoshi (sat)The smallest unit of bitcoin: one hundred-millionth of a bitcoin. 100,000,000 sats make 1 BTC., a hundred-millionth of a bitcoin, and any fraction of one is dropped. So the halvings cannot go on for ever: at the 33rd, the reward rounds down to nothing, and the total stops just short of 21 million, the supply capSupply cap (21 million)Bitcoin's rules halve the new supply every 210,000 blocks, so issuance slows towards zero. The total approaches 21 million without quite reaching it.. From then on, miners will earn only fees, as the whitepaper planned.