Block subsidy

Bitcoin's monetary policy is one small function. Give it a block height and it shifts a starting value of 5,000,000,000 satoshis to the right once per completed halving, then returns the answer. Nobody can call that function with different arguments, and every node calls it before accepting a block, which is what a fixed supply actually consists of.

How it works

The block subsidy is calculated in whole satoshis, and the halving is a bit shift rather than a division.

Each halving epoch is 210,000 blocks long. The first paid 50 coins per block, the second 25, then 12.5 from July 9, 2016, then 6.25 from May 11, 2020, and 3.125 since block 840,000 on April 20, 2024. Because the arithmetic is integer based, later epochs lose fractions to truncation, and after 33 halvings the shifted value rounds to nothing at all. That happens at height 6,930,000, projected for somewhere around the year 2140, after which blocks pay only fees.

The truncation has a visible consequence. Add up every subsidy in the schedule and the total is 20,999,999.9769 coins, not a round 21 million. The famous cap is therefore an outcome of the code rather than a target the code aims at, which is the difference between a rule and a promise.

Enforcement is the interesting part. A miner is free to write any amount into the coinbase output, and nodes are free to reject the block, which is what they do the instant the claimed amount exceeds subsidy plus fees. Nothing about this requires trusting the miner, the pool, an exchange, or a chart. Run a node and your own copy of the software recomputes the correct subsidy at every height, from genesis to the present, and refuses anything else.

Because the schedule is height based, issuance is measured in blocks rather than time. At 144 blocks a day, the current epoch adds roughly 450 new coins daily, and the difficulty adjustment is what keeps that figure close to correct even as hash rate changes.

Why this matters when you buy bitcoin

The subsidy is the reason bitcoin's supply is knowable, and knowing it is most of the case for holding any.

Start with a correction, because it trips up almost everyone. You are never buying newly issued coins. Exchanges sell you coins that already exist, from other sellers, and the subsidy only sets how many fresh coins miners can add to the market each day. That daily 450 coin flow is the entire new supply the world has to absorb, against traded volumes many times larger, which is why the subsidy matters as a long term constraint rather than a daily price driver.

The second point is verification. A supply cap you take on faith is no better than a central bank's inflation target. The cap is checkable, and checking it is not a specialist activity: a full node validates the subsidy of every historical block during initial sync and will tell you the total issued so far. If you are holding bitcoin for reasons that depend on the 21 million figure, running a node is how you stop outsourcing that belief.

The third is the marketing cycle. Every halving brings a wave of pitches built on the subsidy cut, from "pre-halving" investment plans to tokens claiming a similar schedule. The subsidy is a supply rule, not a price forecast, and bitcoin has traded both up and down in the year after previous halvings. A hard supply schedule tells you nothing about what someone will pay next month.

Finally, the cap only benefits people who actually hold their coins. A scarce asset sitting in a custodian's database is a claim on that custodian, and the schedule enforced by thousands of nodes does nothing to enforce their solvency. Our hardware wallet reviews exist for that gap.

The subsidy nobody claimed: block 501,726

On December 30, 2017, block 501,726 was mined with a coinbase transaction that claimed nothing at all.

The block was empty of other transactions, and its coinbase output paid zero, so the 12.5 coins the miner was entitled to were never created. Nodes had no reason to complain, because claiming less than the maximum is perfectly valid. The most likely explanation is misconfigured mining software rather than a statement of any kind.

The practical result is that bitcoin's real ceiling is a little below the theoretical 20,999,999.9769, and it drops again every time a miner underclaims or a coinbase output is unspendable. Nobody can add those coins back. It is a small, permanent illustration of the rule that the schedule is a maximum, never a guarantee of issuance.

Block subsidy vs halving

The block subsidy is the amount; the halving is the moment the amount changes. One is a quantity you can look up for any height, the other is an event that happens every 210,000 blocks and gets a countdown clock. The pairing confuses people mainly in the phrase "the halving cuts the block reward", which is only half right: a halving cuts the subsidy, and the reward also contains fees, which the halving does not touch.