A cryptocurrency halving is an important step in its development where the rewards from mining new blocks are cut in half to affect the supply and inflation rates.

One main reason that cryptocurrencies have halvings is to keep the coins in a deflationary state. A halving is where the block rewards for a given chain are cut in half. This happens at regular intervals and is tied to a certain amount of new blocks that are mined.

By reducing the rewards that are received from mining a new block so significantly, there are instantly 50 percent fewer new coins coming into circulation. This is a major event for the token economy as the basic supply and demand of the coin are impacted. Many coins look for their value to increase over time through this deflationary event, and lowered supply often leads to higher demand and increased prices.

If we look at Bitcoin and its halving as an example, there have been three thus far, each about four years apart. A Bitcoin reward for mining a block started at 50 BTC, and it is now down to 6.25. This means that every 10 minutes or so when a new Bitcoin block is mined, only 6.25 BTC enters circulation. The rewards will continue to decrease every four years like this until the last Bitcoin is mined in approximately 2140.

This halving schedule also means that people can plan and predict the emissions schedule of a coin. Bitcoin with its hard cap of 21 million coins can be estimated to be totally mined by 2140 based on the continued halving which will slow the creation of new coins right down.

Halving events, like the one we see in Bitcoin, are commonplace among coins that are not pre-mined. This event even happens with coins that are staked.

The next Bitcoin halving is scheduled for March 2024 and will see mining rewards fall to a mere 3.125 BTC per block.