Digital cryptocurrency Bitcoin has undergone its “halving” event which happens every four years or after every 210,000 blocks of transactions. This event, according to a law in its rulebook, cuts in half the value of the digital payout that the ‘miners’ receive for supporting the network by providing computing resources.
The halving event provides a reward to Bitcoin backers who are basically supplying CPU time and electricity that enables the Bitcoin network to survive. While the markets were prepared for the impact of the event, some miners received less than what they anticipated. The bonus was dropped to 12.5 Bitcoins per processed block from 25, which is directly going to impact the number of miners. According to CoinDesk data, the halving event also resulted in price fall of 5 percent which translates to $627 (Rs 42,096) per Bitcoin, a drop from $660 (Rs 44,305).
Ever since its launch, the value of Bitcoin has gone up to about 50 percent, but the concept is still relatively new for the majority of population. According to analysts, the valuation will remain constant for the coming few years, but could see a huge drop if the miners are not satisfied with their cuts.
There have already been some fallout in anticipation of the halving event. KnCMiner, a Swedish Bitcoin mining firm filed for bankruptcy in May citing the fact that the mining operation would no longer be viable. There is stiff competition from Chinese miners, and Bitcoin mining companies have to streamline operations and run lean setups to remain active. The next halving event is scheduled for 2020.
Update: The prices recovered sharply, to $655 (Rs 43,970) per bitcoin, before starting on a downward trend again.