Bitcoin’s supply schedule is fixed in its code. New coins are issued as a reward for adding blocks, and that reward halves at set intervals – roughly every four years.
Why it exists
To create a predictable, finite supply. The total will approach 21 million and never exceed it. The halving is the mechanism that tapers issuance towards that limit.
The design intent was scarcity, in explicit contrast to currencies whose supply can be expanded by decision.
What it does to miners
Halves their revenue from issuance overnight, while costs stay the same. Operations with expensive electricity become unprofitable and shut down.
Difficulty then adjusts downward, making mining easier for those remaining, and the network stabilises at a lower total cost. This has happened at each halving without incident.
The price question
Widely claimed to drive price increases, on the reasoning that reduced new supply with steady demand should push price up.
The counter-argument is that the schedule is known to everyone years in advance, so any predictable effect should already be reflected in the price.
Historically, large price increases have followed halvings. Whether that is causal or coincident with broader cycles is disputed and the sample is very small – a handful of events.
The long-term question
As issuance approaches zero, miners must be funded by transaction fees alone. Whether fees will be sufficient to secure the network is a genuine open question with a long horizon.
The caveat
Explanation of a mechanism, not a prediction and not advice.