The first Bitcoin halving occurred in November 2012. The next halving was in July 2016, and the most recent halving was in May 2020.

The reward, or subsidy, for mining, started out at 50 BTC per block when Bitcoin was released in 2009. The amount drops in half each time a new halving takes place. For instance, after the first halving, the reward for Bitcoin mining dropped to 25 BTC per block.

The last halving will occur in 2140. At that point, there will be 21 million BTC in circulation and no more coins will be created. From there, miners will just be paid with transaction fees.

Baker points out that miners may shift transaction processing power away from BTC once the next halving takes place as they seek more transaction fees elsewhere to make up for lost Bitcoin revenue.

Fewer miners would mean a less secure network, experts say.

On the other hand, while the halving reduces the reward for miners, it equally lowers the supply of new coins without reducing the demand, notes Patricia Trompeter, CEO of cryptocurrency miner Sphere 3D Corp.

“If the economic theory holds true, which historically for Bitcoin it has, Bitcoin prices should increase dramatically in response to the supply shock,” she says. “Although, there is still debate on whether the historical price movement around each halving was a direct product of the halving.”

Higher prices would be an incentive for miners to keep processing Bitcoin transactions.