HALVING PARTY

Many of the most significant events in Bitcoin’s history came about by happenstance and could not have been predicted. But the halving was a milestone that was baked into Bitcoin’s protocol from the very start. All that Bitcoin had to do was survive for four years and the block reward halving would automatically kick in.

Often nicknamed “The Halvening,” as a reflection of the informal language that permeated early Bitcoin culture, the first programmatic block reward reduction arrived in November 2012. This was slightly less than four years since Satoshi mined the genesis block, reflecting the fact that while new blocks are published every ten minutes on average, this timing varies, resulting in the first halving arriving ahead of schedule. It nevertheless landed at the precise block height Satoshi had programmed, when the network mined block number 210,000.

The first halving was significant in a number of ways. Aside from the obvious, it marked the moment at which precisely half of Bitcoin’s 21 million supply had been mined. Not only did the event serve as an opportunity to celebrate the progress Bitcoin had made in the space of four years, but it highlighted Bitcoin’s scarcity, which mimicked that of precious metals like gold by reducing issuance over time.

The Lucky Block

Block 210,000 was mined on November 28, 2012 at 15:24:38 UTC by the mining collective Slush’s Pool and credited to a miner known as “Laughingbear.” The miner used a Radeon HD 5800-series GPU, one of the most popular high-end graphics cards favoured for mining at the time. Remarkably, Laughingbear had been mining for less than a week when they hit this extremely lucky block, becoming part of Bitcoin history.

The graphics card used to mine block 210,000 became a piece of Bitcoin lore in its own right. In 2013, Laughingbear put the AMD Radeon HD 5800 GPU up for sale as “a piece of Bitcoin history” and it was purchased by an early Bitcoin investor at a significant markup.

To the relief of everyone watching, the halving passed without a hitch, the transition from 50 BTC to 25 BTC reward per block occurring exactly as encoded. Developer Gavin Andresen quipped that the biggest surprise was “nothing happened”: the software handled it seamlessly and the chain kept chugging along. Half of all bitcoins that would ever exist had been created and the issuance rate was now halved, demonstrating Bitcoin’s ability to enforce monetary scarcity in a predictable manner.

The Bitcoin community may not have known in advance who would mine the block, but they knew it was coming and had plenty of time to prepare the party. In Portland, Oregon, a Bitcoin group held a halving party at a local bar with attendees watching the countdown on BitcoinClock.com. Other gatherings were hosted in New Hampshire and Slovakia, where members of the Progressbar hackerspace rigged up a live countdown clock to block 210,000 complete with a YouTube live stream of the counter to ring in the moment.

According to Sean Harris of Halving Party, “The quadrennial halving celebrations are a nice reminder of what’s truly going on here: true sound money with rules but no rulers. A fun party won't solve your problems, but the playbook goes like this: show the world how cool you become when you port Bitcoin into your life and let them find out everything else. It’s not up to Bitcoiners to teach everyone – it’s up to each individual to solve their own problems. In time, they’ll discover that Bitcoin fixes a multitude of problems, and halving parties are a great way to pique their curiosity.”

Financial author Marc Friedrich believes that “The first halving in 2012 made Bitcoin’s design crystal clear: monetary inflation is mathematically capped and transparent. And that’s the key difference. Every participant knows exactly how and when new supply enters the system. That stands in brutal contrast to fiat currencies, where central banks expand the money supply at will, eroding purchasing power and fuelling bubbles.”

Leading up to the halving, there was intense speculation about Bitcoin’s price and the mining economy, with many wondering whether slashing the block reward would create a supply shock. As Vitalik Buterin wrote at the time, opinions ranged “from those who believe Bitcoin will enter a period of extreme financial instability… to those who believe the markets will simply hum along as if nothing had happened at all.” On the day itself, Bitcoin was trading around $13, and the price scarcely moved in the following days. Within a year, however, a major bull run was underway.

In retrospect, the most significant thing about the first Bitcoin halving is that nothing happened other than exactly what was meant to happen: the block reward reduced, the network continued faithfully producing blocks, and the community took a moment to toast how far they’d come before buckling down to four years of producing 25 BTC blocks.