Bitcoin Price Drops 5% Amid ‘Halving’

July 9, 2016, 5:55 PM UTC
Bitcoin coin
A twenty-five bitcoin is arranged for a photograph in Tokyo, Japan, on Thursday, April 25, 2013.
Photograph by Tomohiro Ohsumi — Bloomberg/Getty Images

A version of this post titled “Bitcoin halves and have-nots” originally appeared in the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter.

Bitcoin, the digital money, has just undergone its second-ever “halving” event.

Hard-coded into cryptocurrency’s rulebook is a law that cuts in half the value of the digital payout that so-called miners receive for supporting the network with their computing power. The event happens about every four years. (More specifically, after every 210,000 blocks of transactions are processed.)

As Balaji Srinivasan, CEO of the Andreessen Horowitz-backed Bitcoin company 21, described it, the occasion is a sort of New Year’s Eve for financial futurists.

The halving event has proven—and will continue to prove—consequential for the mining set. The Bitcoin backers who supply the CPU time and electricity that fuel the Bitcoin network do so to recoup a reward. Although the markets have been pricing in the impact of the long-awaited trim over the past few weeks, some miners face an uncertain fate: their prize just dropped to 12.5 Bitcoins per processed block, down from 25. With less potential revenue on the table, fewer miners may survive. Already, KnCMiner, a Swedish Bitcoin mining startup, filed for bankruptcy in May.

As the halving got underway, Bitcoin’s price fell 5% to near $627 per Bitcoin from about $660, according to CoinDesk data. At press time, the value of the cryptocurrency appeared to be recovering from the initial drop; its price hovered at just under $640, about a 4% drop for the day. Expect more volatility as the markets adjust.

coindesk-bpi-chart (3)

via CoinDesk

Since the beginning of the year, Bitcoin’s value has risen almost 50%—a couple hundred-dollar increase, likely in anticipation of the impending scarcity.

By the way, tomorrow I am headed to Fortune’s Brainstorm Tech conference in Aspen, Colo. where I’ll be hosting two roundtable sessions, one on the blockchain (the tech behind Bitcoin) and another on cybersecurity. I’ll report back next week with insights from the panels.

Enjoy the weekend. More news here.

Updated July 9, 2016 to clarify that the price of Bitcoin fluctuated in the lead-up to the halving event.

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