The number of bitcoins generated by the digital process known as mining halved on Saturday. Rather than being issued by a central authority, bitcoins are “mined” by solving complex mathematical problems.
These were previously released in blocks of 25, but this has now been halved to 12.5. There is a hard cap of 21m bitcoins, of which around 15m have been mined so far.
The price of a single bitcoin had dropped by around three per cent on Sunday evening to $641 compared to the pre-halving day-average of $663 on Friday, according to market exchange Bitstamp.
The first halving (also known as halvening) event took place on 28 November 2012, after the 210,000th bitcoin "block" was mined. Before then, 50 bitcoins were released per block.
On Saturday, the 420,000th block was mined. Halving events will continue every 210,000 blocks, or roughly every four years, until sometime in the next century when all 21m bitcoins will have been mined.
As the reward for mining has now been diminished, some less efficient miners could struggle to stay afloat.
"Though there has been no disruption to the bitcoin hash rate since the halving and the general sentiment within the mining industry remains positive, the last few months have been particularly difficult for mining companies as shown by Kncminer and Spondoolies Tech closing down," Oliver Carding, founder of CoinJournal, told City A.M.
"However, as long as the price remains at current levels, it's unlikely there will be large decreases or volatility. Though some companies will struggle to make their mining operations viable, there is likely to be an emergence of replacements for outdated mining technology."