The blockchain is sustained by rewarding so-called “miners” – whose job it is to validate transactions – by paying them with the cryptocurrency.
However, unlike some other digital currencies, there is not an infinite supply of Bitcoins. The amount that can be mined is capped at 21 million, and most are already in circulation.
So roughly every four years – or when the Bitcoin blockchain reaches a certain size – the number of bitcoins rewarded to those who successfully validate transactions is cut in half. The most recent Bitcoin “halving” (or “halvening”) event took place on 20 April 2024, reducing the reward for miners from 6.25 bitcoins to 3.125.
This ensures Bitcoin’s supply is drawn out for longer while demand, in theory, goes up over time. But with fewer rewards for miners, it can also lead some to consider whether it is financially worthwhile for them to continue the costly operation of running their powerful computers.