Bitcoin has surpassed a significant technical milestone that saw rewards for mining activity halved for the third time in the cryptocurrency’s 11-year history.
Occurring roughly every four years, a so-called halving (or halvening) event cuts the reward for successfully validating a new “block” in half. The latest halving saw compensation fall from 12.5 to 6.25 bitcoin – or from roughly $110,000 to $55,000 at current market rates.
The highly anticipated halvening was triggered at 19:23 UTC on May 11 with the addition of block 630,000 to the Bitcoin blockchain.
Bitcoin is the world’s first cryptocurrency and the largest today by market capitalization, followed by Ethereum and XRP.
The Bitcoin halving mechanism is built into the system in order to incrementally reduce the rate at which new coins are minted, thereby slowing progress towards the maximum number of coins that can ever be in circulation: 21 million.
The number of coins currently in existence sits at 18 million, with the cap (the role of which is to simulate scarcity) expected to be reached at some point in the first half of next century.
Since the cryptocurrency’s creation in 2009, halvings have taken place in November 2012 and July 2016 and May 2020 – with the next set to occur in May 2024.
The immediate ramification of the latest halving is that revenue brought in by mining operations will be cut in half, making maintaining the Bitcoin network (by validating transactions and participating in the creation of new blocks) a far less economically attractive proposition.
While larger mining consortia are likely to be able to shoulder the reduction in revenue, the halving is expected to root out smaller miners who are unable to balance the cost of resources with the decreased earnings.
The miners now ejected from the Bitcoin ecosystem are expected to redirect their computing resources towards the maintenance of more lucrative cryptocurrency networks.
The first block to fall under the new reward rate (block 630,001) was reportedly mined by Chinese mining syndicate Antpool, which boasts the greatest total computing power of any mining operation in the world.