What is bitcoin halving – and will it affect the price?

The latest halving is expected to take place in the early hours of Saturday in the US and UK, when the reward for adding a new block of transactions to the blockchain will decrease from 6.25 bitcoins to 3.125.

“The setup feels really familiar to past occasions where there has been a very sharp rally and it forms a top … then breaks,” says Neil Wilson, the chief analyst at the brokerage firm Finalto.

Bitcoin mining companies, which take on the energy and equipment costs of validating transactions, face a financial hit as their reward drops.

To make bitcoin mining financially sustainable, S&P says, the currency will need to be used more widely throughout the global economy in order to increase miners’ revenues via transaction fees.

Nonetheless, the chair of the SEC, Gary Gensler, was begrudging in giving the go-ahead, describing bitcoin as a volatile asset used for “illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing”.

Carol Alexander, a professor of finance at the University of Sussex business school, says any price boost from the halving will ultimately be illusory.