The 21 million cap, halvings and mining
How new bitcoin is created through mining, why there will never be more than 21 million, and how halvings cut new supply roughly every four years.
Unlike ordinary money, Bitcoin's supply follows a fixed schedule written into its code. That schedule is one of the main reasons people find Bitcoin interesting, and also one of the most misunderstood.
Mining in simple words
Mining is how new blocks are added and how new bitcoin is created. Miners run specialized machines that make trillions of guesses, hashing block data again and again until one finds a hash that meets the network's target. The winner adds the next block and receives the block reward, made of newly created bitcoin plus the fees from the transactions in that block.
Bitcoin aims for about one block every 10 minutes. Roughly every two weeks (every 2,016 blocks), the network adjusts the difficulty, making the puzzle harder if blocks came too fast or easier if they came too slowly. This keeps the pace steady no matter how many miners join or leave.
The 21 million cap
The rules allow at most 21 million bitcoin to ever exist. Each bitcoin can be split into 100 million smaller units called satoshis (sats), so you do not need to buy a whole coin.
Halvings
Every 210,000 blocks, which is roughly every four years, the new-coin part of the block reward is cut in half. This event is called the halving.
| Period | New BTC per block |
|---|---|
| 2009 (start) | 50 |
| After 2012 halving | 25 |
| After 2016 halving | 12.5 |
| After 2020 halving | 6.25 |
| After 2024 halving | 3.125 |
Because the reward keeps halving, new supply shrinks over time. The last tiny amounts are expected to be created around the year 2140.
What happens when rewards run out?
As new-coin rewards shrink, miners will rely more and more on transaction fees. Whether fees alone will pay enough to keep the network as secure as it is today is an open debate.
Scarcity does not equal a rising price
People often say a fixed supply means the price must go up. That is not guaranteed. Price depends on demand as well as supply. If demand falls, a scarce asset can still drop sharply. Halvings are known years in advance, and past price moves around them do not promise anything about future ones.
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