Bitcoin experts comment on block reward halving

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Today marks a major milestone in the world of bitcoin: block reward halving. According to bitcoinblockhalf.com, the bitcoin blocking mining reward halves every 210,000 blocks. Today the coin reward is slated to decrease from 25 coins to 12.5 coins.

CoinReport received comments from some bitcoin experts who give their take on the effect on bitcoin’s price following the halving, and what the event will mean for various players in the bitcoin industry and beyond.

Gene Kavner, Founder and CEO of iPayYou

What do you think will be the immediate price effect of the halving?

iPayYou founder & CEO Gene Kavner

Many of the bitcoin price movements as of recently have been due to the speculation on where the price will move in the near future. Bitcoin mining reward decreases by half at predetermined periods about every 4 years, so it will not come as news to anyone. The price of this halving has, most likely, already been baked into the current price of bitcoin. The big question is, whether the halving will have a negative effect on the bitcoin miners who perform confirmations of transactions. In my opinion, the metric to watch for is the blockchain mining hash rate after the halving. If it decreases suddenly, it is quite possible that the bitcoin price will fall. If the hash rate continues its upward trend it would indicate no negative effect on the miners and bitcoin price is very likely to follow upwards.

What effect do you think it will have in the long term?

Long term halving by itself will not have any effect. Bitcoin will grow based on its usability in commerce and demand on its unique nature as both, the store of value and the global settlement engine.

What do you think it will mean for the larger multi-national companies beginning to consider or implement blockchain technologies?

Bitcoin miners will see the direct impact of the halving since the reward of mining is paid only to them.  They get to keep the reward as consideration for the sizable electric bill they need to pay to run the mining equipment. If the halving of their revenue does not dissuade them from continuing their critical role in confirming bitcoin transactions, it will have no effect on those using bitcoin.

Rik Willard, Founder and Managing Director of Agentic Group

What do you think will be the immediate price effect of the halving?

Agentic Group founder and managing director Rick Willard

I think that, like a stock split, the immediate effect will be a halving of value per bitcoin. However, unlike a stock split, I think we will see an accelerated vote of confidence in the network reflected as a surge in price of as much as 10 percent to 20 percent. This could happen within a matter minutes or hours after the halving.

What effect do you think it will have in the long term?

Long term, it could create more value and spur a significant increase in mining. This may not be great because mining has become so much of a zero sum game these days with mega facilities like those in China and other places spending millions of dollars to get blocks.

What do you think it will mean for financial institutions?

I’m not sure that it will mean that much to financial institutions. Banks are learning how to use the rails and to roll with bitcoin in general. They are figuring out how to play in this sandbox and retain their relevance, so the price of bitcoin itself may not be a real issue to them, at least in the near term.

What do you think it will mean for the blockchain industry?

It could add muscle to blockchain’s “Proof-of-Concept” status and embolden the development of more “Meta-Assets” – that is, value derived from distributed global consensus aligned with the tokenization of various products and processes. This is the beginning of the beginning.

Luis Molina, Founder and CEO of Fermat

What do you think will be the immediate price effect of the halving?

Fermat founder and CEO Luis Molina

Over the past month, we have already seen the market react, to some extent, to the bitcoin halving. The price lift that just occurred indicates a market sentiment that the price will rise as a result of halving.

What effect do you think it will have in the long term?

The long-term effect is dependent on how much of the current market supply is coming from newly mined bitcoins. If new bitcoins are a larger share of the market supply, then halving that supply should equal an increase in price. If the contrary occurs, where new bitcoins only make up a small share, then the effect will be negligible. In both cases, if the level of demand remains the same but the supply decreases, the price will rise.

What do you think it will mean for blockchain and, in particular, bitcoin startups?

Should the price rise and stabilize to some extent at that level, more new companies will join the ecosystem. Bitcoin startups which are funded in bitcoins also might extend their runway if they are still holding their bitcoins.

Sheffield Clark, CEO of Coinsource

What do you think will be the immediate price effect of the halving?

(Left to right) Bobby Sharp, Sheffield Clark,
and Travis Gough

I believe it will definitely lead to some spurts of volatility with the possibility of that trending towards the upside. The actual amount of bitcoin entering the market daily will only decrease by 1,800 BTC, or $1.2 million at current prices, but the larger impact will probably take place on perception of the market. An event of such historical significance will undoubtedly attract media attention to some degree, and therefore stands to trigger a larger fear of missing out which tends to add upwards pressure to price.

Net, I’m bullish.

What effect do you think it will have in the long term?

One could argue that it may breed confidence among larger institutional investors uncomfortable with the arguably loose monetary policies of many central banks today, especially NIRP [Negative Interest Rate Policy], and trigger capital inflows to bitcoin due to its track record of stellar year-over-year returns an long-term deflationary nature. Considering quantity of capital tied up in negatively yielding bonds is over $7 trillion, there could quite a bit of long-term upwards pressure to price subsequent to halving, should this confidence take hold.

What effect do you think it will have on the usage of bitcoin ATM?

As news of and confidence in bitcoin’s ability to enable self-service banking with nothing more than a phone and some cash, we believe there will be significant uptick in the usage of bitcoin ATMs from financially under-serviced segments of the population. In short, it will be huge for Bitcoin ATMs.

What do you think it will mean for startups in the industry?

I believe it will lead to a bit of a pop in what many are labeling the blockchain bubble, and we will see VC attention circle back around to bitcoin. This will most likely manifest itself through a series of a few high profile & value investments or strings of multiple low-mid profile & value investments taking place across the industry. I expect it to be a bit of both.

Will bitcoin miners be displeased or more encouraged to mine?

At the July 5, 2016 price of $670, net dollar value of bitcoin mined per day post-halving is $1.206 million. At the July 5, 2015 price of $277, net dollar value of bitcoin mined per day pre-halving was $0.997 million. Ultimately, miners have already been through and are therefore prepared for these sorts of revenue fluctuations. This means I don’t believe it will have much of an impact on miners, regardless of which direction price moves.

Image credits:

Bitcoin logo – Sirius  (CC BY 3.0)

Gene Kavner’s photo – Courtesy of iPayYou

Rik Willard’s photo – Courtesy of Agentic Group via PR firm Wachsman PR

Luis Molina’s photo – Courtesy of Fermat via PR firm Wachsman PR

Sheffield Clark’s photo – Courtesy of Coinsource via PR firm Wachsman PR