Key Takeaways
- When bitcoin started in 2009, miners earned a block reward of 50 bitcoin each ten minutes.
- Every four years, the block reward is cut in half, reaching 6.25 in May 2020 and 3.125 in 2024.
- The reduction in bitcoin supply over time leads to a maximum outstanding of 21 million bitcoin in the year 2140.
- Some investors believe that reducing the rate at which bitcoin supply increases over time can lead to higher bitcoin prices in the long run.
When bitcoin started in 2009, 50 bitcoin were awarded each ten minutes to the miners securing the network and posting all recorded transactions to the Bitcoin blockchain. Every four years, the size of the block rewards is halved, falling to 25 in November 2012, 12.5 in July 2016, 6.25 in May 2020, and 3.125 in 2024, etc. These block rewards continue to be halved every four years until all 21 million bitcoin have been released by the year 2140.
This halving schedule and known monetary policy is a key element to the value proposition of bitcoin, especially in a world where Central Banks have been printing fiat currency for many years without regard for the inflation rate that degrades the value of the currency.
If the economics of supply and demand hold and the demand for bitcoin is fixed, each halving reduces supply, which could send the price of bitcoin higher.
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