Bitcoin price stable after historic halving

But bitcoin’s price was little changed in the immediate aftermath, rising 0.7 percent to $63,467.46 ($98,920) in U.S. trading.

The cryptocurrency has already made a record-breaking run this year on the prospect of reduced supply, as well as big strides toward greater trading accessibility.

Its value has increased by 50 percent since the beginning of the year, reaching a high of $73,797 last month. Prices fell in the days before the halving.

“This is the first time that bitcoin has beaten the previous historical record before the halving even took place,” said eToro analyst Simon Peters.

Since the digital currency’s launch in 2009, the reward has been halved for every 210,000 blocks, in an event that takes place every four years.

The reward, which had been set at 6.25 bitcoins per new block since May 2020, has now fallen to 3,125 bitcoins.

Halving represents a major survival test for commercial bitcoin mining companies, which operate thousands of computers in huge hangers or warehouses, because it cuts into their main source of revenue.

Faced with the prospect of lower margins, bitcoin players have invested heavily in advanced new computers, along with an efficiency drive that mainly aims to reduce energy costs.

In addition, some mining companies “will have to shut down some of their machines to cut costs, which means creating fewer bitcoins,” said Manuel Valente, founder of cryptoasset investment group Coinhouse.

“And if the price of Bitcoin falls, their profitability decreases further,” he said.

Halving therefore exposes the weakest bitcoin mining companies, and could potentially trigger a new wave of sector consolidation in a survival of the fittest, commentators say.

AFP