The recent Bitcoin halving event, or “the halvening” on April 20, 2024, reduced the rate of creation of new Bitcoins, a reward earned by Bitcoin miners, by 50%. Miners verify and validate new Bitcoin transactions and help maintain the blockchain by expending considerable computational power. In return, they earn a reward in the form of newly minted coins and transaction fees.
Post the recent halving, block rewards earned by Bitcoin miners declined by 46%, from $1,782 million in April 2024 to $966 million in May 2024. Over the same period, the cost of electricity consumption (as a percentage of block rewards) by the Bitcoin network increased by 27 percentage points from 40% in April 2024, to 67% in May 2024.
In this Insights piece, we provide an overview of the Bitcoin mining process, analyze the associated costs of mining, and examine the rewards earned by miners for adding a new block to the chain, along with the reduction in block subsidies at every quadrennial halving event.
Click here to read more about the economics of Bitcoin mining.
