The "halving," or "halvening," is when bitcoin's protocol automatically updates to reduce the reward for mining a bitcoin by one half. This occurs every 210,000 blocks that are mined on bitcoin's blockchain. For the first 210,000 blocks, the mining reward was 50 bitcoins (BTC). Halving will continue until 2140, after which the result will be less than one satoshi, the smallest bitcoin unit.
The first halving was on November 28, 2012. Bitcoin's block reward dropped from 50 BTC to 25 BTC. The second was on July 9, 2016, dropping the block reward from 25 BTC to 12.5 BTC.
Historically, each halving preceded a significant jump in the U.S. dollar price of bitcoin. This phenomenon has helped fuel a vehement discussion of whether the halving causes the bitcoin dollar price increase because the halving is defined by a reduction in the pace of issuance of new bitcoin. Some observers believe that the halving has no direct price effect in the short term because the schedule of halvings is well known and would at all times be priced into the current price of bitcoin.
The third halving took place on May 12, 2020. It caused a significant dip in bitcoin's price, as well as an approximate 16 percent decrease in the processing power of the bitcoin network worldwide, as miners' profitability decreased approximately 44 percent.
- What Is ‘The Halvening’?. Bitcoin Magazine.
- Bitcoin’s “halvening” won’t boost its price. Financial Times.
- Bitcoin’s Price Has Bounced but Miners May Still Be Switching Off Post-Halving. Coindesk.
- Bitcoin's hash rate appears to drop 16% after miner revenue declines by 44%. The Block.