The once-every-four-years event cut in half the so-called mining reward, which is the amount of Bitcoin released from the network to compensate companies known as miners for validating transactions. The modification went into effect as of 8:10 pm Friday evening New York time, according to data from analytics website mempool.space and Blockchain.com. The price of Bitcoin was little changed near the $64,000 level following the halving.
This change to the rewards was all by design and preordained by the code that runs Bitcoin’s blockchain. The supposed anonymous creator of Bitcoin, Satoshi Nakamoto, sought to use the halving mechanism to maintain an eventual hard cap of 21 million Bitcoin in order to keep the original cryptocurrency from being inflationary. As a result of this halving, the fourth since 2012, the daily reward paid to miners will drop to 450 Bitcoin from 900.
Bitcoin advocates expect the halving to be a positive catalyst for the latest bull market since it further reduces the supply of new tokens at a time when demand for them has risen from new exchange-traded funds that directly hold the digital asset. Proponents of the original cryptocurrency such as MicroStrategy chairman Michael Saylor have touted it is a better store of value than traditional fiat currencies, which they say are more vulnerable to inflation.
Still, while Bitcoin has rallied to records following past halvings, market watchers including analysts from JPMorgan Chase & Co and Deutsche Bank had predicted that the event was pretty much priced into the market. As expected, the halving was fully priced in so price movement was limited, said Kok Kee Chong, chief executive officer of Singapore-based AsiaNext.
