What the Bitcoin Halving is, and How to Witness it
If you are new to bitcoin, or you aren’t very tech-savvy, you might not have a good understanding of what the halving is or how you can experience it. This article will explain what the halving is, why it is significant, and how you can witness this piece of history. Feel free to skip the intro sections and go straight to “How to Witness the Bitcoin Halving” if that’s why you’re here.
The Block Reward
Before discussing the halving, you need to understand what the mining block reward is. A new bitcoin block gets mined every 10 minutes (approximately). Each block provides a reward to whoever mines it, consisting of two parts: a block subsidy and the transaction fees for the transactions within the block.
Block Reward = Block Subsidy + Transaction Fees
The amount of the block subsidy is pre-determined based on the block height, or number of blocks that have been mined so far.
What is the Halving?
The rules of the bitcoin protocol state that every 210,000 blocks, or roughly four years, the block subsidy gets cut in half. Each time the block subsidy is halved, the event is called a bitcoin halving. Halvings will continue until the last one takes place at block #6,930,000 (approximately the year 2140). At that point, the block subsidy will be cut from 0.00000001 BTC to 0.00000000 BTC, because bitcoin does not allow any units smaller than 0.00000001 BTC (or 1 satoshi).
Why is the Halving Significant?
If you add up all the bitcoins that can possibly be mined, you will find where the “21 million bitcoins” limit comes from:
- block #0 has no spendable bitcoins
- blocks #1 to 209,999 each allow 50 new bitcoins
- blocks #210,000 to 419,999 each allow 25 new bitcoins
- blocks #420,000 to 629,999 each allow 12.5 new bitcoins
- blocks #630,000 to 840,000 each allow 6.25 new bitcoins
- …
- blocks #6,720,000 to 6,929,999 each allow 0.00000001 new bitcoins
If you do the math, you will find that there can only ever be a maximum of 20,999,949.97690000 new bitcoins created, hence the “21 million bitcoins” limit. This means that bitcoin halvings are the mechanisms which allow bitcoins to be truly finite and scarce.
The Third Halving
Originally, each block paid 50 bitcoins to the miner. On November 28, 2012 at block #210,000, that number halved to 25 BTC. The block subsidy halved again to 12.5 BTC on July 9, 2016 at block #420,000.
Later today (May 11, 2020) block #630,000 will be mined, and with it the block subsidy will be halved for the third time, reducing new bitcoins to 6.25 per block. Currently, the annual increase in the available bitcoin supply is 3.6%. After this third halving, bitcoin’s annual increase will fall to 1.8%, dropping it below that of gold and most government fiat currencies. This highlights bitcoin’s value at a time when governments are printing more money than ever!
How to Witness the Bitcoin Halving
This section will explain two different ways that you can experience the bitcoin halving. The first method is for beginners and does not require the use of a full bitcoin node. The second method is more advanced and requires you to already have a bitcoin node synced so you can use the bitcoin command line tool (bitcoin-cli) that comes with Bitcoin Core.
Beginner’s Guide
If you aren’t ready to run a full node, you can still use a block explorer to witness the halving. My preferred block explorer is www.blockstream.info. When you go to blockstream.info, below the search bar you can see the latest block that has been mined at the top of the list. Just keep an eye on that and refresh more frequently as we get closer to block #630,000.
To see the pre-halving block reward, click on a block before #630,000, and look at the first transaction listed (#0). This is a special transaction, called a coinbase transcaction, which pays the miner the block reward (block subsidy + transaction fees). You should see that it is over 12.5 BTC (for example 14.0 BTC, which means 1.5 BTC was paid in transaction fees and 12.5 BTC was paid as a block subsidy).
Once you see block #630,000 in the block explorer, you can look at the coinbase transaction for that block and see that the block reward (output value of the coinbase) should be less than 12.5 BTC (for example 8.0 BTC, which would mean 6.25 BTC was the block subsidy and 1.75 BTC was paid in transaction fees). Seeing the block reward below 12.5 BTC for block #630,000 and subsequent blocks tells you that the halving occurred successfully and that bitcoin is function as designed.
There is also a great bitcoin dashboard by Clark Moody at https://bitcoin.clarkmoody.com/dashboard/, which has all of the relevant information. The “Blockchain” section shows the block height, and the “Mining Economics” section shows the current block subsidy. There is even a “Halvings” section which shows the block countdown til the halving, and displays the current bitcoin epoch (each time a halving occurs, we enter a new epoch). Before the third halving, we are in bitcoin epoch #3, and with block #630,000 we enter epoch #4.
Advanced Guide
If you are comfortable using the bitcoin-cli command line tool, make sure you have bitcoind running and have it fully synced. You can see the current block height using the command:
bitcoin-cli getblockcountTo see the block subsidy of a given block, use the command:
bitcoin-cli getblockstats 629970 | grep subsidyAny block between #420,000 and 629,999 should display the subsidy as 1250000000 (satoshis, or 12.5 BTC). Once block #630,000 is mined, you can see its halved subsidy of 625000000 sats.
If you want to use a single command that combines all of this information to show the current block number, current block subsidy, and the number of blocks remaining until the halving, use the following:
printf "\nCurrent block: $(bitcoin-cli getblockcount)\nCurrent block subsidy: $(bitcoin-cli getblockstats $(bitcoin-cli getblockcount) | grep subsidy)\nBlocks left: $(expr 630000 - $(bitcoin-cli getblockcount))\n"Happy Halving!
I hope you’ve learned something from this article! The bitcoin halving is an exciting event that only occurs every four years, so I strongly recommend that you spend some time today watching it! Happy Halving!
