Blockchain/Level II · Mechanics/2.3 Blocks and the chain/Lesson 6
The block subsidy and the halving
The bit-shift that defines the money supply and the 100-block lock on new coins
MaterialsA copy of Bitcoin Core source code, specifically `validation.cpp` or `main.cpp` containing `GetBlockSubsidy`A block explorer interface (e.g., mempool.space or blockchain.com)A calculator capable of binary operations
Wonder
- Why does a right-shift operator in C++ enforce a hard monetary cap?
- What happens to the difference if a miner claims less than the maximum allowed subsidy?
- How many blocks must pass before a newly minted coin can be moved?
Explore
- New bitcoins enter circulation exclusively through the coinbase transaction of each block. This is not a separate ledger entry but a specific output in the first transaction of every valid block, where the miner asserts ownership of new value. The amount is determined by `GetBlockSubsidy` in Bitcoin Core’s validation logic, which calculates the reward based on the current block height rather than calendar time.
- The initial subsidy was hardcoded at 50 BTC, equivalent to 5 billion satoshis. To halve this value every 210,000 blocks, the code performs an integer division of the block height by 210,000 to determine how many halvings have occurred. It then applies a binary right-shift operator to the initial 5 billion satoshi value for each completed interval.
- This bit-shifting mechanism is deterministic and efficient. Because it operates on integers, any fractional satoshi resulting from division is truncated downward. After 33 such shifts, the value rounds to zero. This mathematical convergence ensures that no more than approximately 21 million bitcoins will ever be created, regardless of external economic conditions or mining power fluctuations.
- The first halving occurred at block 210,000 on November 28, 2012, reducing the subsidy to 25 BTC. Subsequent halvings followed at blocks 420,000 (July 9, 2016), 630,000 (May 11, 2020), and most recently at block 840,000 on April 20, 2024, lowering the reward to 3.125 BTC. The next reduction is scheduled for block 1,050,000.
- A miner’s total revenue consists of this subsidy plus all transaction fees from the included transactions. However, a miner may choose to claim less than the maximum allowed amount. Unclaimed satoshis are simply never created and cannot be claimed later. As the subsidy keeps halving, fees must carry more of the cost of securing the network, the subject of a long-running debate about bitcoin’s future security budget.
- Coinbase outputs are locked by a consensus rule: they cannot be spent until they have 100 confirmations. A coinbase output exists only on the branch that contains its block, so if that block is replaced in a reorganization, the new coins vanish. The delay keeps such coins from passing into other transactions that would then become invalid.
Key facts
- The block subsidy starts at 50 BTC and halves every 210,000 blocks.
- Bitcoin Core calculates the subsidy by right-shifting 5 billion satoshis based on block height.
- The most recent halving occurred at block 840,000 in April 2024, setting the subsidy to 3.125 BTC.
- Miners may claim less than the full subsidy; the unclaimed amount is never created.
- Coinbase outputs require 100 confirmations before they can be spent.
- The geometric series of halvings converges to a maximum supply of roughly 21 million BTC.
Exercise nine, six, three, one
9CollectList 9 subsidy eras: the 2009 start and the next eight halvings, with the subsidy in each and whether it has happened yet.
6ClusterGroup the 9 into 6 by the share of all bitcoin each era issues: half, a quarter, an eighth, a sixteenth, a thirty-second, and the remainder.
3DistillReduce the 6 to 3 consequences of a shrinking subsidy for miners and fees.
1CrystallizeWrite 1 sentence explaining how integer truncation in the subsidy calculation enforces the absolute supply cap.
Fact check
Dates, figures and claims checked against the published sources listed below.