Halvening

Halvening is a distribution plan many blockchain’s employ to decrease their block rewards over time. Decreasing rewards by 50% at a pre-programmed schedule of block heights.

The concept was introduced in the Bitcoin white paper. Bitcoin’s initial block reward was set at 50 bitcoin per block with the intent to decrease this initial reward by 50% approximately every 4 years. Until the reward completely disappears when the targeted supply cap of 21 million is reached in the mid-2100’s. 

Many other proof of work blockchains have disinflationary rewards schedules similar to Bitcoin’s, reassuring potential users coin supply will remain limited.

In practice Bitcoin’s halvenings have occurred in a shorter time frame than 4 years. The exponential rise in price has attracted a plethora of hash power from miners. Because hash power has tended to rise over time. The difficulty level for earning block rewards is often playing catch up to the network’s hash power and the average block has taken less than 10 minutes to process.

Since the halvening schedule is built around an assumption of 10 minutes per block. The fact blocks are usually produced in less than 10 minutes leads to slightly less than 4 years between halvenings.

Over time halvenings have evolved into market events. Investors know the block height when they will be implemented. 

Leading to speculation from investors believing the supply decrease will lead to a price increase. Due to reduced emissions of tokens via block rewards after the halvening takes place. 

Further Reading Halvening

What is the Bitcoin Halvening and Why It Matters