Yesterday Bitcoin (BTC) saw its third halving event. The event was covered by live streams worldwide and calling it a big happening might even be an understatement. Many were waiting to see who would mine the last block before the halving and if the bitcoin price would show an immediate response. In this article we’ll review the event that transpired last night.
Bitcoin halving caused volatility
The Bitcoin halving caused significant price rallies in the past. For example, the all-time high of $20.000 that bitcoin reached in 2017 happened only a year after the second halving in 2016. An immediate price surge after the halving last night was unlikely. The halving nevertheless caused quite a bit of price volatility.
To give you a better idea of the volatility: the highest price that the BTC price reached yesterday was $9.182 on cryptocurrency exchange Coinbase. Not long after that, right before the halving happened, a low was reached of $8.185. That is a price swing of almost $1.000! Of course, on the 10th of May we saw an even bigger price swing. Bitcoin then dropped more than $1.500 in just a couple of hours.
The last Bitcoin block arrived
The last block, block number 629.999, was mined by mining pool f2pool. The miners of f2pool were the last to receive 12.5 BTC for successfully discovering a block. From block number 630.000 on the reward will be 6.25 BTC. F2pool made use of the occasion by making a symbolic gesture.
The pool added a message to the transaction that is a reference to the message that was added by Bitcoin inventor Satoshi Nakamoto to the very first Bitcoin block. The message that f2pool added last night reads:
“NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue”
The message here is that governments worldwide are printing money to save the economies that suffer due to the coronavirus. However, this quantitative easing causes fiat currencies to lose value. This is the main reason why Bitcoin was invented during the previous financial crisis, as Bitcoin has a fixed maximum supply. In other words, the third Bitcoin halving happened in a very special time that again emphasizes the problem Bitcoin might be able to solve.
For now, we can only wait how the halving affects miners. Many analysts expect that especially older miners will have to quit their operations. They will no longer be able to generate any profits as their electricity costs are now higher than the rewards they receive. The initial reaction of the network, therefore, maybe a drop in the hash rate, after which the difficulty adjustment might stabilize the situation again.