Tamahagane is garbage steel, and folding makes the metal objectively weaker than forging a single lump of metal. You fold tamahagane because it’s such a low quality steel and the impurities are removed (or at least spread out) by the folding, at the cost of introducing weak points that can fracture under stress. You have to fold tamahagane because it’s so bad, because the folded steel in its weakened state is still stronger than the impure metal.