What is the Bitcoin halving? Exploring the changes in the mining ecosystem as it reaches its 12th anniversary

What is the Bitcoin halving? It is one of the most important mechanisms embedded in the Bitcoin network’s design. It refers to the event that occurs approximately every four years (specifically after 210,000 blocks) when miners’ rewards for block validation are halved. November 2024 marks the 12th anniversary of the first halving, during which the mining industry has undergone dramatic changes.

The Mechanism and the Four Historical Trends of Bitcoin Halving

The Bitcoin halving is not just a market event but a mathematical mechanism that gradually limits supply and maintains asset scarcity. In the first halving in November 2012, the block reward was reduced from 50 BTC to 25 BTC. Subsequently, in July 2016, it decreased to 12.5 BTC, then to 6.25 BTC in May 2020, and most recently, in April 2024, down to 3.125 BTC.

This four-stage reduction in rewards causes the amount of new Bitcoin supplied to the network to decrease exponentially. In the first four years, about 10.5 million BTC were mined, while the remaining supply is now approximately 1.2 million BTC. This structural design ensures that by around 2140, all Bitcoins will be mined, and thereafter, miners’ revenue will fully shift to transaction fees.

The Chain Reaction of Mining Difficulty and Reward Decline

With each halving, the network’s mining difficulty has continued to rise. Recent data shows difficulty reaching an all-time high of 102.3 trillion, just after surpassing the 100 trillion mark for the first time in early November 2024. This increase in difficulty means miners must deploy more computational power to earn rewards, which also significantly raises electricity consumption.

Under the dual pressures of reward halving and difficulty increase, maintaining mining profitability becomes a serious challenge for miners. Currently, with the block reward at 3.125 BTC, if Bitcoin prices remain flat, the time and energy costs required for mining will relatively increase. This scenario is pushing the industry to innovate in mining technology and improve operational efficiency.

Remaining Supply and the Economics of Supply Limitation

As of January 2026, the circulating supply of Bitcoin will reach approximately 19.98 million BTC, with a completion rate of 95.2% of the maximum supply of 21 million BTC. The remaining roughly 1.2 million BTC will take several years to mine at the current pace.

The fixed cap of 21 million for Bitcoin’s supply is fundamentally different from traditional centrally issued currencies. Designed to make inflation technically impossible, it establishes Bitcoin as a long-term store of value. This scarcity guarantee is one of the reasons Bitcoin has maintained its position as the largest market cap cryptocurrency for over 12 years.

Miners’ Adaptive Strategies and Industry Turning Points

Within the structural constraints of decreasing block rewards, miners are deploying various adaptive strategies. According to CoinShares’ October 2024 mining report, despite facing declining profitability and falling hash prices, the industry is accelerating investments in cost reduction and artificial intelligence adoption.

Looking at major mining companies, Marathon Digital sold a large amount of Bitcoin in the first half of 2024 but shifted its strategy after the fourth halving to actively buy Bitcoin. In August, it issued $250 million in convertible senior bonds to strengthen capital. Meanwhile, TeraWulf, during a period in July 2024 when Bitcoin prices hovered around $56,500, considered mergers due to low profit margins, indicating active industry restructuring.

Mining Profitability Amid Price Fluctuations and New Perspectives

Market changes also significantly impact the mining industry. In November 2024, when Bitcoin reached recent highs, the dollar-denominated block rewards increased, but the actual improvement in mining profitability was limited. According to CoinGecko, current Bitcoin prices are in a correction phase from previous highs, with volatility reflecting market uncertainty.

Looking ahead, some regions like El Salvador are developing mining infrastructure utilizing low-cost renewable energy sources such as geothermal and volcanic energy. The global geographic distribution of mining is expanding, contributing to decentralization.

These environmental changes suggest that the Bitcoin halving, occurring on a 12-year cycle, is not merely a technical event of reward reduction but a paradigm shift in mining economics. Miners’ survival strategies, energy efficiency, and capital allocation are all being re-optimized. The halving is increasingly demonstrating its role as a practical mechanism to maintain the system’s health.